Dow dropped 87, decliners over advancers 5-4 & NAZ lost 40. The MLP index was fractionally lower to the 247s. Junk bond funds fluctuated & Treasuries were purchased, taking the yield on the 10 year Treasury below 2%. Oil slid back pennies in the 57s while gold soared 19 to 1437 (more below).
AMJ (Alerian MLP Index tracking fund)
A key measure of the American economy slipped this month after 3 consecutive months of increases as consumers saw the trade war with China as an increased risk. The Conference Board's consumer confidence index declined to 121.5 in Jun, down from May's recording of 134.1. The drop is more than the decline to 131.1 that was expected. “The escalation in trade and tariff tensions earlier this month appears to have shaken consumers’ confidence,” Conference Board senior director Lynn Franco said. “Although the Index remains at a high level, continued uncertainty could result in further volatility in the Index and, at some point, could even begin to diminish consumers’ confidence in the expansion.” The drop brought the index to its lowest level since Sep 2017. The measurement of consumers gives an assessment of the current US economic climate, as well as consumer expectations for the coming 6 months.
Consumer confidence drops more than expected, reaching its lowest point in nearly two years
Gold prices hit their highest level in 6 years as investors plowed into the precious metal amid the prospects for lower interest rates, a softer global economy & increased geopolitical tensions. Futures for Aug delivery hit a high of $1442 per ounce overnight, its highest level since May 14, 2013, when it reached $1444. Today gold traded 1.2% higher at $1435. Gold has been on a tear, rallying more than 8% this month & over 9% for the qtr. Those gains put the metal on pace for its best monthly & quarterly performances since 2016. In that time, expectations for the Federal Reserve to cut interest rates have increased sharply. Traders are currently pricing in a 100% probability of a rate cut in Jul. The Fed said last week it will “act as appropriate” to maintain the current economic expansion. The announcement sent rates along with the $ lower. Gold is seen as store of value in times of a weakening $ & economic activity. The central bank's remarks came after the release of softer economic data. The Philadelphia Fed's manufacturing index tumbled to its lowest level since Feb & jobs creation slowed down to just 75K last month. Investors also added to their gold holdings amid rising tensions between the US & Iran. Pres Donald Trump signed an exec order yesterday to impose “hard-hitting” sanctions after a US drone was shot down last week. The US says the drone was flying in intl airspace, but Iran says the drone was flying over Iran, violating intl law.
Gold jumps to 6-year high on low rates, slowing economy and heightened geopolitical tensions
Investors are nervous, so they are buying safe haven gold & Treasuries. Trade talks with China are stuck in the mud & a final agreement could be months away. Both China & the US are feeling the impasse as growth slows. Lower interest rates at the Fed are expected, also making gold more attractive. But that is being prompted by economic data which is less exciting. Iran tensions add to the higher level of anxiety by investors. For the time being, traders are holding their breath & hoping for the best.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 58.13 | +0.23 | +0.4% |
| GC=F | Gold | 1,435.60 | +17.40 | +1.2% |
Stocks moved lower as tensions & trade concerns worried investors. The latest US sanctions on Iran drew a sharp rebuke from the Islamic Republic, with Iranian
Pres Hassan Rouhani calling the economic crackdown “outrageous &
idiotic.” Tensions between Tehran & DC heightened
last week after an Iranian missile shot down an unmanned US spy drone
over the Strait of Hormuz. Investors are looking toward the upcoming US-China trade talks to help reduce tensions of a trade war that is damaging the global economy. Later this week, Trump & Chinese Pres Xi Jinping are expected to meet at the G-20 summit in Japan. Jerome
Powell, the Chairman of the Federal Reserve will be sitting down at the
Council on Foreign Relations for a discussion on the economy &
monetary policy this PM. The Commerce Dept said new home sales
dropped 7.8% to a seasonally adjusted annual rate of 626K
units last month, the lowest level since Dec. Apr's sales pace
was revised up to 679K units from the previously reported 673K
units. In Asia, China's Shanghai was down 0.9%,
snapping a 6-session winning streak. Hong Kong's Hang Seng fell 1.2% & Japan's Nikkei closed down 0.4%. In Europe, London's FTSE was little changed, Germany's DAX slid lower & France's CAC was also off a tad.
The latest US sanctions on Iran drew a sharp rebuke from the Islamic Republic, with Iranian
Pres Rouhani calling the economic crackdown “outrageous and
idiotic” & describing Pres Trump as “afflicted by mental retardation.” A
spokesperson for the Iranian Foreign Ministry also criticized Trump's
sanctions, saying it means
“closing [the] channel of diplomacy forever.” “Trump’s desperate administration is destroying
the established international mechanisms for maintaining world peace and
security,” the tweet said. Tensions
between Tehran & DC heightened last week after an Iranian
missile shot down an unmanned US spy drone over the Strait of Hormuz
(US & Iranian officials have disputed whether the drone was in
Iranian airspace or not). In response, the US prepared a military
strike against Iran, but at the last minute, called it off. Yesterday, Trump signed an exec order to impose “hard-hitting” sanctions against Iran, targeting the finances of the country's supreme leader, Ayatollah Ali Khamenei, & other senior officials. “We
will continue to increase pressure on Tehran,” Trump said during
remarks inside the Oval Office. “Never can Iran have a nuclear weapon.” Tensions are a direct result from Trump's decision to unilaterally
withdrew from the Iran nuclear deal – arguably the biggest foreign
policy achievement of the Obama administration – more than one year ago,
bucking US allies while imposing a punishing round of economic
sanctions on Tehran. The other signatories to the deal, including China,
Russia, France, the UK, Germany & Iran, said they would continue to
honor the agreement, despite the US withdrawal.
Iran warns that latest US sanctions mean end of diplomacy 'forever'
A key measure of the American economy slipped this month after 3 consecutive months of increases as consumers saw the trade war with China as an increased risk. The Conference Board's consumer confidence index declined to 121.5 in Jun, down from May's recording of 134.1. The drop is more than the decline to 131.1 that was expected. “The escalation in trade and tariff tensions earlier this month appears to have shaken consumers’ confidence,” Conference Board senior director Lynn Franco said. “Although the Index remains at a high level, continued uncertainty could result in further volatility in the Index and, at some point, could even begin to diminish consumers’ confidence in the expansion.” The drop brought the index to its lowest level since Sep 2017. The measurement of consumers gives an assessment of the current US economic climate, as well as consumer expectations for the coming 6 months.
Consumer confidence drops more than expected, reaching its lowest point in nearly two years
Gold prices hit their highest level in 6 years as investors plowed into the precious metal amid the prospects for lower interest rates, a softer global economy & increased geopolitical tensions. Futures for Aug delivery hit a high of $1442 per ounce overnight, its highest level since May 14, 2013, when it reached $1444. Today gold traded 1.2% higher at $1435. Gold has been on a tear, rallying more than 8% this month & over 9% for the qtr. Those gains put the metal on pace for its best monthly & quarterly performances since 2016. In that time, expectations for the Federal Reserve to cut interest rates have increased sharply. Traders are currently pricing in a 100% probability of a rate cut in Jul. The Fed said last week it will “act as appropriate” to maintain the current economic expansion. The announcement sent rates along with the $ lower. Gold is seen as store of value in times of a weakening $ & economic activity. The central bank's remarks came after the release of softer economic data. The Philadelphia Fed's manufacturing index tumbled to its lowest level since Feb & jobs creation slowed down to just 75K last month. Investors also added to their gold holdings amid rising tensions between the US & Iran. Pres Donald Trump signed an exec order yesterday to impose “hard-hitting” sanctions after a US drone was shot down last week. The US says the drone was flying in intl airspace, but Iran says the drone was flying over Iran, violating intl law.
Gold jumps to 6-year high on low rates, slowing economy and heightened geopolitical tensions
Investors are nervous, so they are buying safe haven gold & Treasuries. Trade talks with China are stuck in the mud & a final agreement could be months away. Both China & the US are feeling the impasse as growth slows. Lower interest rates at the Fed are expected, also making gold more attractive. But that is being prompted by economic data which is less exciting. Iran tensions add to the higher level of anxiety by investors. For the time being, traders are holding their breath & hoping for the best.
Dow Jones Industrials
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