Dow inched up 1, decliners over advancers 4-3 & NAZ fell 18. The MLP index crawled higher in the 345s. Junk bond funds were purchased & Treasuries rose once again, taking the yield on the 10 year Treasury down to 2.1%. Oil did little after yesterday's big drop to the 51s & gold added another 8 to 1341.
AMJ (Alerian MLP Index tracking fund)
The US trade deficit decreased to $50.8B in Apr in a reading just before its tariff battle with China escalated, according to gov data. The number matched expectations & marked a decline from an upwardly revised $51.9B in Mar. In the weeks before Pres Trump stepped up his rhetoric on China, the deficit increased $2.1B to $29.4B as exports fell by $1.8B & imports increased by $300M, numbers from the Census Bureau & Bureau of Economic Analysis showed. That came after the trade shortfall with China increased $22.9B in Q1 to $80.8B. Overall for the month, exports fell $4.6B to $206.8B while imports declined $5.7B to $257.6B. Along with its China battle, the White House also has gone after Mexico recently, threatening to impose a 5% tariff on Mon against Mexico imports, with equal increases each month to a maximum of 25%. The administration has demanded that Mexico stem the flow of illegal immigrants at the southern border. The US had a goods shortfall with Mexico of $7.9B for Apr, after a $23B deficit in Q1. The deficit in goods & services stands at $205.4B for the year, a 2% increase from the same period a year ago.
The ECB pushed back the timing of its first post-crisis interest rate hike & said it would continue paying banks to lend to households & businesses as the outlook for global growth darkens further. "The Governing Council now expects the key ECB interest rates to remain at their present levels at least through the first half of 2020, and in any case for as long as necessary," the ECB said. The central bank had previously said rates would stay at their current record-low levels until the end of this year, although investors have not been expecting any rate change for years to come. In addition, under the ECB's 3rd Targeted Longer-Term Refinancing Operation (TLTRO III) banks will be able to borrow from the central bank at 10 basis points above the average rate applied in the Main Refinancing Operations, currently set at zero, over the life of the loan. And they could even get paid for lending if they pass on the cash. "For banks whose eligible net lending exceeds a benchmark, the rate applied in TLTRO III will be lower and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation plus 10 basis points," the ECB said. The ECB has so far refrained from taking bolder steps, such as cutting rates or restarting its massive bond purchases, maintaining a recovery in inflation towards its target of just under 2% had simply been delayed, not derailed. Attention will now shift to Pres Mario Draghi's news conference later, in which he will unveil the ECB's new forecasts for growth & inflation in the euro zone. With yesterday's decision, the ECB's rate on bank overnight deposits, which is currently its primary interest rate tool, remained at -0.40%. The main refinancing rate, which traditionally determined the cost of credit in the economy, remained unchanged at zero % while the rate on the marginal lending facility, the emergency overnight borrowing rate for banks, stayed at 0.25%.
ECB pushes back rate hike and offers to pay banks to lend
Traders are taking a breather after the latest rebound in the stock market. They will probably spend time today trying to evaluate the intl trade scene which is difficult for anybody to figure out. Demand for gold & Treasuries remains strong. The May jobs data will be reported tomorrow & they are anxiously waiting for that report.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 51.74 | +0.06 | +0.1% |
| GC=F | Gold | 1,339.00 | +5.40 | +0.4% |
Pres Trump threatened China with possible tariffs on “at least” another $300B worth of goods, escalating tensions in the trade war between the 2 countries as negotiations drag on. Trump,
before heading to France for D-Day commemorations, told reporters that
“a lot of interesting things are happening” during talks with China, but
did not provide further details. The countries have been stuck at a
trade standoff which escalated last month when Trump increased tariffs
on $200B worth of Chinese imports to 25%. “Our
talks with China, a lot of interesting things are happening. We’ll see
what happens... I could go up another at least $300 billion and I’ll do
that at the right time,” Trump said. Trump
did not specify which Chinese goods would be affected but said he
believed China is opening to brokering a deal that would squash the
trade dispute. He also mentioned Mexico, following a threat to impose a 5% tariff on all Mexican goods starting Mon if the neighboring
countries do not find a solution to the flow of illegal immigrants &
drugs into the US. “I think China wants to make a deal and I think Mexico wants to make a deal badly,” Trump said. China
responded to Trump's tariffs by increasing tariffs on $60B worth
of American products that went into effect last week. The US then
raised the stakes by placing Chinese telecom giant Huawei on a blacklist
that effectively bars US companies from supplying it with computer
chips, software other components without gov approval.
Trump threatens China with tariffs on another $300B of goods
The US trade deficit decreased to $50.8B in Apr in a reading just before its tariff battle with China escalated, according to gov data. The number matched expectations & marked a decline from an upwardly revised $51.9B in Mar. In the weeks before Pres Trump stepped up his rhetoric on China, the deficit increased $2.1B to $29.4B as exports fell by $1.8B & imports increased by $300M, numbers from the Census Bureau & Bureau of Economic Analysis showed. That came after the trade shortfall with China increased $22.9B in Q1 to $80.8B. Overall for the month, exports fell $4.6B to $206.8B while imports declined $5.7B to $257.6B. Along with its China battle, the White House also has gone after Mexico recently, threatening to impose a 5% tariff on Mon against Mexico imports, with equal increases each month to a maximum of 25%. The administration has demanded that Mexico stem the flow of illegal immigrants at the southern border. The US had a goods shortfall with Mexico of $7.9B for Apr, after a $23B deficit in Q1. The deficit in goods & services stands at $205.4B for the year, a 2% increase from the same period a year ago.
The US trade deficit fell in April just before the increase in tensions with China
The ECB pushed back the timing of its first post-crisis interest rate hike & said it would continue paying banks to lend to households & businesses as the outlook for global growth darkens further. "The Governing Council now expects the key ECB interest rates to remain at their present levels at least through the first half of 2020, and in any case for as long as necessary," the ECB said. The central bank had previously said rates would stay at their current record-low levels until the end of this year, although investors have not been expecting any rate change for years to come. In addition, under the ECB's 3rd Targeted Longer-Term Refinancing Operation (TLTRO III) banks will be able to borrow from the central bank at 10 basis points above the average rate applied in the Main Refinancing Operations, currently set at zero, over the life of the loan. And they could even get paid for lending if they pass on the cash. "For banks whose eligible net lending exceeds a benchmark, the rate applied in TLTRO III will be lower and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation plus 10 basis points," the ECB said. The ECB has so far refrained from taking bolder steps, such as cutting rates or restarting its massive bond purchases, maintaining a recovery in inflation towards its target of just under 2% had simply been delayed, not derailed. Attention will now shift to Pres Mario Draghi's news conference later, in which he will unveil the ECB's new forecasts for growth & inflation in the euro zone. With yesterday's decision, the ECB's rate on bank overnight deposits, which is currently its primary interest rate tool, remained at -0.40%. The main refinancing rate, which traditionally determined the cost of credit in the economy, remained unchanged at zero % while the rate on the marginal lending facility, the emergency overnight borrowing rate for banks, stayed at 0.25%.
ECB pushes back rate hike and offers to pay banks to lend
Traders are taking a breather after the latest rebound in the stock market. They will probably spend time today trying to evaluate the intl trade scene which is difficult for anybody to figure out. Demand for gold & Treasuries remains strong. The May jobs data will be reported tomorrow & they are anxiously waiting for that report.
Dow Jones Industrials
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