Dow rose 38, advancers over decliners about 3-2 & NAZ gained 33. The MLP index went up slightly in the 245s. Junk bond funds crawled higher & Treasuries remained in demand with the yield on the 10 year Treasury down to 2.02%, a multi year low (more below). Oil went up to the 54s & gold climbed 5 to 1355 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Federal Reserve Chair Jerome Powell said the case has strengthened for interest rate cuts ahead. After this week's central bank meeting, Powell said policymakers are concerned about some of the recent economic developments & see a growing case for easier policy. “Overall, our policy discussion focused on the appropriate response to the uncertain environment,” he said. “Many participants believe that some cut to the fed funds rate would be appropriate in the scenario they see as most likely.” Among those concerns are slowing global growth, inflation that persistently falls short of the Fed's 2% target & the ramifications of tariffs the US & its trading partners, particularly China, have leveled. The comments came following a meeting in which the FOMC opted to keep its benchmark interest rate unchanged but signaled possible cuts ahead amid a weakening economic environment. “Many participants now see the case for somewhat more accommodative policy has strengthened,” Powell said. The decision to hold the line was 9-1, but a dot plot chart that shows individual members' expectations for rates showed division about where rates go thru the remainder of 2019. The median “dot” indicated no change in rates this year, but the full chart showed 8 members in favor of staying put, 8 expecting to cut & one projecting a qtr-point increase. Powell said even those members who favored the status quo “agree the conditions for accommodation have strengthened since our May meeting.”
Powell: Some Fed officials believe the case for more accommodative policy has strengthened
Gold prices settled lower, easing back from the previous day's settlement at their highest in 14 months, then climbed after the Federal Reserve left key interest rates unchanged, but shifted away from its “patient” stands on rates. The Fed held benchmark interest rates steady at 2.25%-2.50%. However, officials also said that over the last 6 weeks, “uncertainties” have increased about the outlook & they shifted away from their prior patient stance. Officials appear sharply divided about whether the Fed will cut interest rates this year, judging from the central bank's projections of future interest rate moves, known as the “dot plot.” Aug gold was at $1354 an ounce shortly after the Fed announcement & then declined by $1.90 to settle at $1348. Yesterday, prices notched the highest most-active contract settlement since Apr 18, 2018. After the Fed news, yields for benchmark debt were moving lower, with the yield for the 10-year Treasury note at 2.05%, which can make gov debt less appealing to buyers seeking haven assets compared against bullion. Prices for gold still trade higher for the week as well as the month so far because investors have bought haven assets against a backdrop of uncertainty about the resolution of the import tariff dispute between China & the US & on fears that the global economy is weakening. Yesterday, ECB Pres Mario Draghi suggested that the ECB could introduce more stimulus if the eurozone economy weakens further.
Oil futures settled modestly lower, giving up the gains they saw in the immediate wake of US gov figures that revealed a larger-than-expected drawdown in crude stockpiles, the first in 3 weeks. West Texas Intermediate crude for Jul fell 14¢ (0.3%) to settle at $53.76 a barrel. The Jul contract, which expires tomorrow, climbed 3.8% yesterday to finish at its highest in over a week. Aug Brent crude shed 32¢ (0.5%) to $61.82 a barrel. It wrapped up yesterday at $62.14, the highest settlement in a week. Oil prices showed little reaction after the FOMC statement.
Treasury yields fell sharply after the policy statement from the Federal Reserve suggested the central bank could cut interest rates later this year. The 10-year Treasury note yield fell 3.6 basis points to 2.023%, its lowest closing level since Nov 8 2016, the day when Donald Trump scored a presidential election victory. The 2-year Treasury note yield, sensitive to shifting expectations for Fed policy, plunged 10.9 basis points to 1.758%, the lowest since Nov 2017. The 30-year bond rate was down 1.5 basis points to 2.537%, its lowest since Oct 2016. Debt prices move in the opposite direction of yields. The Fed took out the phrase “patience” from its policy statement, adding that uncertainties around the economic outlook had picked up. As expected, the central bank left its federal-funds rate unchanged at 2.25-2.50%. The Fed’s interest-rate projections, or the “dot plot”, indicated the central bank's rate-setting committee was split between the options of standing pat or easing rates. 7 members forecast 2 rate cuts by the end of 2019. Fed Chair Jerome Powell appeared to give succor to calls for an “insurance cut” after he said that “an ounce of prevention is worth a pound of cure,” & that the central bank would act appropriately if risks materialized. Analysts have said economic data has yet to point to an imminent recession, despite signs of weakness cropping up in the labor market & the manufacturing sector.
The news from the Fed was good enough to satisfy investors & they bid up stocks, although not aggressively. They are still assessing the Fed's words. Meanwhile, negative investors keep buying gold & Treasuries while stock averages are close to record highs. That disparity can not last. Fed moves are going to be put on a backburner & more attention will be paid to trade negotiatios with emphasis on the US-China deal. Enthusiasm brought to the stock market by the bulls will be tested.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
A split Federal Reserve left interest rates unchanged during its 2-day meeting this week, & despite outward pressure from both the markets & Pres Trump, signaled there will be no cuts in 2019. Policymakers
at the central bank, who dropped the word "patient" from the
statement, said they expect one rate cut next year & one rate hike
in 2021. "In light of these uncertainties and muted
inflation pressures, the Committee will closely monitor the implications
of incoming information for the economic outlook and will act as
appropriate to sustain the expansion, with a strong labor market and
inflation near its symmetric 2 percent objective," the FOMC statement
said. Investors closely watching the decision, as traders clamored for an
interest rate cut. Trump also suggested yesterday that he could strip
Powell of his chairmanship if the Fed did not acquiesce & lower
borrowing costs, saying "let's see what he does" when asked whether he
still wants to demote Powell. "I think the law
is clear I have a four-year term, and I intend to serve it out," Powell
said during a post-statement press conference. The
central bank voted 9-1 to keep the benchmark federal funds rate
steady at 2.25-2.5%, where it's been since a rate hike
in Dec. St Louis Federal Reserve Pres James Bullard was the
one dissenting vote; he had suggested at the beginning of Jun the Fed
needed to cut rates due to muted inflation, the inverted yield curve &
ongoing uncertainty about trade.
Fed leaves interest rates unchanged, signals no cuts in 2019
Federal Reserve Chair Jerome Powell said the case has strengthened for interest rate cuts ahead. After this week's central bank meeting, Powell said policymakers are concerned about some of the recent economic developments & see a growing case for easier policy. “Overall, our policy discussion focused on the appropriate response to the uncertain environment,” he said. “Many participants believe that some cut to the fed funds rate would be appropriate in the scenario they see as most likely.” Among those concerns are slowing global growth, inflation that persistently falls short of the Fed's 2% target & the ramifications of tariffs the US & its trading partners, particularly China, have leveled. The comments came following a meeting in which the FOMC opted to keep its benchmark interest rate unchanged but signaled possible cuts ahead amid a weakening economic environment. “Many participants now see the case for somewhat more accommodative policy has strengthened,” Powell said. The decision to hold the line was 9-1, but a dot plot chart that shows individual members' expectations for rates showed division about where rates go thru the remainder of 2019. The median “dot” indicated no change in rates this year, but the full chart showed 8 members in favor of staying put, 8 expecting to cut & one projecting a qtr-point increase. Powell said even those members who favored the status quo “agree the conditions for accommodation have strengthened since our May meeting.”
Powell: Some Fed officials believe the case for more accommodative policy has strengthened
Gold prices settled lower, easing back from the previous day's settlement at their highest in 14 months, then climbed after the Federal Reserve left key interest rates unchanged, but shifted away from its “patient” stands on rates. The Fed held benchmark interest rates steady at 2.25%-2.50%. However, officials also said that over the last 6 weeks, “uncertainties” have increased about the outlook & they shifted away from their prior patient stance. Officials appear sharply divided about whether the Fed will cut interest rates this year, judging from the central bank's projections of future interest rate moves, known as the “dot plot.” Aug gold was at $1354 an ounce shortly after the Fed announcement & then declined by $1.90 to settle at $1348. Yesterday, prices notched the highest most-active contract settlement since Apr 18, 2018. After the Fed news, yields for benchmark debt were moving lower, with the yield for the 10-year Treasury note at 2.05%, which can make gov debt less appealing to buyers seeking haven assets compared against bullion. Prices for gold still trade higher for the week as well as the month so far because investors have bought haven assets against a backdrop of uncertainty about the resolution of the import tariff dispute between China & the US & on fears that the global economy is weakening. Yesterday, ECB Pres Mario Draghi suggested that the ECB could introduce more stimulus if the eurozone economy weakens further.
Gold prices settle lower, then climb after Fed shifts away from ‘patient’ stance on rates
Oil futures settled modestly lower, giving up the gains they saw in the immediate wake of US gov figures that revealed a larger-than-expected drawdown in crude stockpiles, the first in 3 weeks. West Texas Intermediate crude for Jul fell 14¢ (0.3%) to settle at $53.76 a barrel. The Jul contract, which expires tomorrow, climbed 3.8% yesterday to finish at its highest in over a week. Aug Brent crude shed 32¢ (0.5%) to $61.82 a barrel. It wrapped up yesterday at $62.14, the highest settlement in a week. Oil prices showed little reaction after the FOMC statement.
Oil prices retreat after their recent rally, even as U.S. crude supplies post first decline in 3 weeks
Treasury yields fell sharply after the policy statement from the Federal Reserve suggested the central bank could cut interest rates later this year. The 10-year Treasury note yield fell 3.6 basis points to 2.023%, its lowest closing level since Nov 8 2016, the day when Donald Trump scored a presidential election victory. The 2-year Treasury note yield, sensitive to shifting expectations for Fed policy, plunged 10.9 basis points to 1.758%, the lowest since Nov 2017. The 30-year bond rate was down 1.5 basis points to 2.537%, its lowest since Oct 2016. Debt prices move in the opposite direction of yields. The Fed took out the phrase “patience” from its policy statement, adding that uncertainties around the economic outlook had picked up. As expected, the central bank left its federal-funds rate unchanged at 2.25-2.50%. The Fed’s interest-rate projections, or the “dot plot”, indicated the central bank's rate-setting committee was split between the options of standing pat or easing rates. 7 members forecast 2 rate cuts by the end of 2019. Fed Chair Jerome Powell appeared to give succor to calls for an “insurance cut” after he said that “an ounce of prevention is worth a pound of cure,” & that the central bank would act appropriately if risks materialized. Analysts have said economic data has yet to point to an imminent recession, despite signs of weakness cropping up in the labor market & the manufacturing sector.
10-year Treasury yield hits lowest since Trump election after Fed hints at rate cut
The news from the Fed was good enough to satisfy investors & they bid up stocks, although not aggressively. They are still assessing the Fed's words. Meanwhile, negative investors keep buying gold & Treasuries while stock averages are close to record highs. That disparity can not last. Fed moves are going to be put on a backburner & more attention will be paid to trade negotiatios with emphasis on the US-China deal. Enthusiasm brought to the stock market by the bulls will be tested.
Dow Jones Industrials
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