Dow added 25, advancers modestly ahead of decliners & NAZ went up 14. The MLP index was steady at 251 & the REIT index was fractionally higher to the 385s (another record). Junk bond funds rose in price & Treasuries were bid higher with yields on multi month lows (more below). Oil climbed higher in the 58s& gold lost 5 to 1277.
AMJ (Alerian MLP Index tracking fund)
Stocks open slightly higher, bond yields fall, after holiday weekend
The yield on the benchmark 10-year Treasury fell to a 19-month low as traders grew more certain that the US-China trade war will last longer & afflict GDP growth more than first thought. The yield on the benchmark 10-tear Treasury, which moves inversely to price, was lower at around 2.29%, off a 19-month low of 2.273% notched earlier in the session. The yield on the 30-year Treasury bond traded at 2.723%, up from a Dec 2017 low of 2.703% & the 2-year Treasury note yielded 2.149%. The 3-month Treasury bill yielded 2.354%, keeping a portion of the yield curve inverted. The German 10-year bund yield hit a low of -0.163%, its lowest level since Sep, 2016. Pres Trump; said from Japan the US was “not ready” to make a deal with China. The US & Beijing have imposed tariffs on each other's goods since the start of 2018, battering financial markets & souring business & consumer sentiment. Most recently, the US hiked the tax rate on $200B of Chinese imports to 25% from 10% & threatened to imposed stricter levies on another $300B worth of Chinese products. A growing number of investors now believe that the central bank may have to cut its overnight lending rate later in 2019 as the waning effects of Trump's tax cuts & mounting trade disputes weigh on economic forecasts.
10-year Treasury yield drops to 19-month low as trade fights threaten US growth
National home prices rose 3.7% annually in Mar, down from 3.9% in Feb, according to the S&P CoreLogic Case-Shiller home price index. Prices had been seeing double-digit annual gains, but they are gone. The largest annual gain was 8.2% in Las Vegas; one year ago, Seattle had a 13% gain a year ago but has dropped dramatically to just 1.6%. The 20-City Composite dropped from 6.7% to 2.7% annual gains over the last year. “Given the broader economic picture, housing should be doing better,” David Blitzer, managing director & Chairman of the Index Committee at S&P Dow Jones Indices, wrote. He noted that mortgage rates & unemployment were low, along with low inflation & moderate increases in real incomes. “Measures of household debt service do not reveal any problems and consumer sentiment surveys are upbeat. The difficulty facing housing may be too-high price increases,” he added. The 10-City Composite rose 2.3% annually, down from 2.5% in the previous month. The 20-City Composite gained 2.7%, down from 3.0% in the previous month. Even with today's smaller gains, prices are still rising almost twice as fast as inflation. In the last 12 months, the S&P Corelogic Case-Shiller National Index is up 3.7%, double the 1.9% inflation rate. Prices are still higher annually in all of the 20 major cities measured by the indices, but some are getting very close to negative territory. Prices in Los Angeles, Seattle, Chicago, San Diego & San Francisco are just over 1% higher than Mar 2018.
Home price gains weaken yet again in March: S&P Case-Shiller index
Consumer confidence surged in May to a 6-month high, spurred by a strong labor market, a new survey showed. Higher gas prices & a flareup in trade tensions with China appeared to do little to dampen the optimism of Americans. The consumer confidence index climbed to 134.1 from 129.2 in Apr, the Conference Board reported. A separate survey that asks Americans how they view the economy in the present rose to an 18-year high of 175.2. The last time the index was higher was in 2000. Another index that tracks how consumers expect the economy to behave 6 months from now rose to 106.6 from 102.7. The postrecession peak is 115.1, set last Oct. The US labor market has shown remarkable resilience in the past year, with companies continuing to add jobs despite somewhat slower growth at home and abroad. A robust jobs market is likely to fuel more consumer spending & keep the economy expanding at a steady clip. “Consumers expect the economy to continue growing at a solid pace in the short-term,” said Lynn Franco, director of economic indicators at board, “And despite weak retail sales in April, these high levels of confidence suggest no significant pullback in consumer spending in the months ahead.”
The consumer confidence data was helpful, but nagging thoughts about trade wars are dimming enthusiasm. The Dow pulled back from early highs after Trump's negative assessment on trade war negotiations. The popular averages remain close to record highs but as the enthusiasm fades, the bulls will be tested in the coming days & weeks.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 59.02 | +0.39 | +0.7% |
| GC=F | Gold | 1,277.40 | -6.20 | -0.5% |
Stocks opened slightly higher as
traders returned from US & UK holidays yesterday, but US
Treasury yields fell as investors anticipate slowing global economic
growth given the trade war with China. 10-year
Treasury yields fell to 2.30% their lowest levels since
Oct 2017 after Pres Trump said during a visit
to Japan that the US was "not ready" to reach a trade deal with
China. US tariffs on goods from China “could go up very, very
substantially, very easily,” Trump added. US home prices rose at the slowest annual pace since 2012 in
the year ended Mar, according to the S&P CoreLogic Case-Shiller
Index. European stocks were mixed after EU parliamentary
elections over the weekend. France's CAC 40 lost 0.4% to 5316, while Germany's DAX slipped 0.3% to
12,038. Britain's FTSE 100 inched up to 7282. In
Asia, markets clocked small gains across the board; Japan's benchmark
Nikkei 225 added 0.4% to finish at 21,260 while Australia's
S&P/ASX 200 gained 0.5% to 6484. South Korea's Kospi
edged up 0.2% to 2048. Hong Kong's Hang Seng added 0.4% to 27,390, while the Shanghai Composite rose 0.6% to
27,390. In commodities markets, crude oil prices edged up while gold slipped as the $ firmed against major currencies.
Stocks open slightly higher, bond yields fall, after holiday weekend
The yield on the benchmark 10-year Treasury fell to a 19-month low as traders grew more certain that the US-China trade war will last longer & afflict GDP growth more than first thought. The yield on the benchmark 10-tear Treasury, which moves inversely to price, was lower at around 2.29%, off a 19-month low of 2.273% notched earlier in the session. The yield on the 30-year Treasury bond traded at 2.723%, up from a Dec 2017 low of 2.703% & the 2-year Treasury note yielded 2.149%. The 3-month Treasury bill yielded 2.354%, keeping a portion of the yield curve inverted. The German 10-year bund yield hit a low of -0.163%, its lowest level since Sep, 2016. Pres Trump; said from Japan the US was “not ready” to make a deal with China. The US & Beijing have imposed tariffs on each other's goods since the start of 2018, battering financial markets & souring business & consumer sentiment. Most recently, the US hiked the tax rate on $200B of Chinese imports to 25% from 10% & threatened to imposed stricter levies on another $300B worth of Chinese products. A growing number of investors now believe that the central bank may have to cut its overnight lending rate later in 2019 as the waning effects of Trump's tax cuts & mounting trade disputes weigh on economic forecasts.
10-year Treasury yield drops to 19-month low as trade fights threaten US growth
National home prices rose 3.7% annually in Mar, down from 3.9% in Feb, according to the S&P CoreLogic Case-Shiller home price index. Prices had been seeing double-digit annual gains, but they are gone. The largest annual gain was 8.2% in Las Vegas; one year ago, Seattle had a 13% gain a year ago but has dropped dramatically to just 1.6%. The 20-City Composite dropped from 6.7% to 2.7% annual gains over the last year. “Given the broader economic picture, housing should be doing better,” David Blitzer, managing director & Chairman of the Index Committee at S&P Dow Jones Indices, wrote. He noted that mortgage rates & unemployment were low, along with low inflation & moderate increases in real incomes. “Measures of household debt service do not reveal any problems and consumer sentiment surveys are upbeat. The difficulty facing housing may be too-high price increases,” he added. The 10-City Composite rose 2.3% annually, down from 2.5% in the previous month. The 20-City Composite gained 2.7%, down from 3.0% in the previous month. Even with today's smaller gains, prices are still rising almost twice as fast as inflation. In the last 12 months, the S&P Corelogic Case-Shiller National Index is up 3.7%, double the 1.9% inflation rate. Prices are still higher annually in all of the 20 major cities measured by the indices, but some are getting very close to negative territory. Prices in Los Angeles, Seattle, Chicago, San Diego & San Francisco are just over 1% higher than Mar 2018.
Home price gains weaken yet again in March: S&P Case-Shiller index
Consumer confidence surged in May to a 6-month high, spurred by a strong labor market, a new survey showed. Higher gas prices & a flareup in trade tensions with China appeared to do little to dampen the optimism of Americans. The consumer confidence index climbed to 134.1 from 129.2 in Apr, the Conference Board reported. A separate survey that asks Americans how they view the economy in the present rose to an 18-year high of 175.2. The last time the index was higher was in 2000. Another index that tracks how consumers expect the economy to behave 6 months from now rose to 106.6 from 102.7. The postrecession peak is 115.1, set last Oct. The US labor market has shown remarkable resilience in the past year, with companies continuing to add jobs despite somewhat slower growth at home and abroad. A robust jobs market is likely to fuel more consumer spending & keep the economy expanding at a steady clip. “Consumers expect the economy to continue growing at a solid pace in the short-term,” said Lynn Franco, director of economic indicators at board, “And despite weak retail sales in April, these high levels of confidence suggest no significant pullback in consumer spending in the months ahead.”
Consumer confidence hits 6-month high despite China trade tensions, costlier gas
The consumer confidence data was helpful, but nagging thoughts about trade wars are dimming enthusiasm. The Dow pulled back from early highs after Trump's negative assessment on trade war negotiations. The popular averages remain close to record highs but as the enthusiasm fades, the bulls will be tested in the coming days & weeks.
Dow Jones Industrials
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