Dow jumped up 311 (session highs & back of 26K), advancers over decliners better than 2-1 & NAZ advanced 107. The MLP index was off another 1+ to the 233s & the REIT index rose 4 to the 387s. Junk bond funds inched higher & Treasuries drifted slightly lower in price. Oil fell to the high 53s & gold added 7 to 1483 (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)
There has been a “sea change” in Federal Reserve policy over the past several months that will need time to make its way thru the system before its effects can be gauged, St. Louis Fed Pres James Bullard said. Easier monetary policy has resulted in a plunge in gov bond yields, taking the benchmark 10-year Treasury note down from around 2% in mid-Jun to around 1.74%. That drop comes less than a week after the Fed voted to lower its benchmark interest rate by 25 basis points to 2-2.25%. Bullard has been one of the biggest advocates for a cut, but in a speech he did not commit to further moves. “While additional policy action may be desirable, the long and variable lags in the effects of monetary policy suggest that the effects of previous actions are only now beginning to impact macroeconomic outcomes,” he said. His comments reiterated statements he previously, saying that he wants to see the impact of the rate cut before assessing further moves. Bullard noted the impact that the escalating trade war has had to stunt economic growth & said the inverted yield curve also “continues to threaten.” Markets widely expect another ¼ percentage point rate reduction at the Sep meeting & is pricing in a small probability of a ½-point cut. “The bottom line is that U.S. monetary policy is considerably more accommodative today than it was as of late last year,” Bullard said.
Fed’s Bullard: Let’s see what the rate cut did before approving more
There are still 1.4 million more jobs than unemployed people, but the gap is closing
Gold prices finished regular trade modestly higher, marking a 3rd straight gain a day after the precious metal extended its rally toward fresh 6-year highs, amid escalating trade policy tensions between China & the US. Gold for Dec delivery rose $7.70 (0.5%) to settle at $1484 after ending 1.3% higher yesterday, extending its highest finish for a most-active contract close since 2013. Bullion has been gaining traction on the back of worries that the US-China tariff conflict won't subside soon. An environment with debt yields also hovering at ultralow levels, & in many cases negative levels, also has supported buying of the yellow metal, which tends to rise during times of global economic uncertainty. Today, equity markets recovered some ground, after seeing the biggest one-day fall of the year yesterday, after China's central bank fixed its widely watched onshore currency at a level higher than expected, a move interpreted by some as a sign of some softening in trade tensions. Still, commodity traders said gold & other precious metals could prosper against a backdrop of weakening global economic growth & continued anxieties on intl trade with no immediate resolution in sight.
Gold futures book third straight gain, hold near 6-year high
Oil futures prices closed sharply lower — including a roughly 7-month low for intl benchmark Brent — as contracts gave up early gains once the stock market pared its recovery. Oil fell as questions persisted over global demand for energy, uncertainty that’s tied to US tensions with major trade partners. West Texas Intermediate (WTI) crude for Sep was down $1.06 (1.9%) to $53.63 a barrel, the lowest finish since Jun 17. WTI traded in positive territory briefly today, up to $55.42. Crude fell 1.7% yesterday & WTI is now off 19% from its 2019 settlement high of $66.30 hit on Apr 23. Global benchmark Oct Brent crude fell 87¢ (1.4%) at $58.94 a barrel, the lowest in 7 months. It traded up to $60.56 earlier, but has now shed 4.7% so far this week. That trims the YTD gain to about 9.5%. Oil prices remained lower as US gov data for the sector forecast growth in the Permian basin & other shale formations would largely offset production losses from the Gulf of Mexico due to Hurricane Barry. The Energy Information Administration (EIA) said in its short-term outlook issued today that Brent crude spot prices will average $64 a barrel in H2 & $65 in 2020. The forecast of stable crude oil prices is the result of EIA's expectations of a relatively balanced global oil market. EIA forecasts that WTI crude oil prices will average $5.50 per barrel less than Brent prices from Q4-2019 thru the end of 2020. That’s a wider gap than the $4 below Brent predicted in last month's report. The wider forecasted Brent-WTI differential reflects EIA updated assumptions about the marginal cost of transporting crude oil via pipeline from Cushing, Okla, to the Gulf Coast. Meanwhile, US crude-oil stocks likely fell for an 8th straight week last week amid an uptick in refinery utilization. Commercial crude inventories are expected to have declined 3.8M barrels last week. Further, a slowdown in crude exports likely limited the size of the expected draw. Exports last week averaged 1.97M barrels per day. If weekly EIA oil data bears this out, exports will be at their weakest since Jan & only the 2nd time this year that they have slipped under 2M b/d, according to EIA data.
Buyers returned in the PM & took the Dow to session highs in the last hour of trading. Markets breadth is so-so, could have been better. The bounce back is almost impressive. The Volatility Index (VIX) dropped 4+ to go under 20. But that compares with the low teens earlier this year. Gold continues to be in demand by negative thinking investors as the trade mess drones on!!
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Bad weather & a tumultuous trade relationship between the US & China have already resulted in a bad year for American farmers — but that
outlook darkened, after Beijing pulled its purchases of US
agricultural products. “This is a body blow to
farmers and ranchers all across the country,” Dale Moore, exec VP of the American Farm Bureau, said. “That’s one
of the things that we are feeling the effects of, and this is on top of a
year when mother nature has been a terrible business partner in many
parts of the country. It’s just a really tough, tough time for farmers
and ranchers in this country.” Shares of
industrial, farming, oil & transportation companies have plummeted, a
direct result of the increased tensions between the 2 largest
economies. Since 2017, farmers have lost more than ½ of their market
exports in terms of value, plunging to about $9B in exports from
close to $20B 2 years ago, Moore said. And while aid from the Trump administration has
helped to cushion the blow — the White House approved a 2nd $16B funding package to offset the trade war's effects on American
agriculture last week — Moore stressed that negotiators need to return
to the table in order to strike a deal. Talks resume next month in
China. “We’ve seen impacts on virtually every
commodity,” he added. “You cannot say it’s an idle threat, because China
has been hammering us for the past couple of years. We went from near
$20 billion to $9 billion. We’ve already taken a $10 billion hit.” Plus,
farmers & ranchers feel like they’re caught in the crosshairs of a
fight that's larger than them — including disputes over intellectual
property theft, industrial goods & steel & aluminum tariffs. Compounded with bad weather — farmers in the Midwest saw one of the rainiest seasons on record this year, stunting their crops’ growth — farmers are facing an increasingly dire situation. In
a sign indicative of how tough things are in agriculture, Moore said,
farm bankruptcies are on the rise, above the historical average.
CHINA TARGETS US AGRICULTURE, DEALING FARMERS ANOTHER DEVASTATING BLOW
There has been a “sea change” in Federal Reserve policy over the past several months that will need time to make its way thru the system before its effects can be gauged, St. Louis Fed Pres James Bullard said. Easier monetary policy has resulted in a plunge in gov bond yields, taking the benchmark 10-year Treasury note down from around 2% in mid-Jun to around 1.74%. That drop comes less than a week after the Fed voted to lower its benchmark interest rate by 25 basis points to 2-2.25%. Bullard has been one of the biggest advocates for a cut, but in a speech he did not commit to further moves. “While additional policy action may be desirable, the long and variable lags in the effects of monetary policy suggest that the effects of previous actions are only now beginning to impact macroeconomic outcomes,” he said. His comments reiterated statements he previously, saying that he wants to see the impact of the rate cut before assessing further moves. Bullard noted the impact that the escalating trade war has had to stunt economic growth & said the inverted yield curve also “continues to threaten.” Markets widely expect another ¼ percentage point rate reduction at the Sep meeting & is pricing in a small probability of a ½-point cut. “The bottom line is that U.S. monetary policy is considerably more accommodative today than it was as of late last year,” Bullard said.
Fed’s Bullard: Let’s see what the rate cut did before approving more
Job openings edged lower in Jun as the labor market continues to tighten, the Labor Dept reported. Employment
vacancies fell to 7.35M from 7.38M in May, according to
the Job Openings & Labor Turnover Survey (JOLTS). The JOLTS report is closely
watched by Federal Reserve policymakers as a measure for slack in the
labor market. The
change in job openings left the gap between vacancies & those
considered unemployed at 1.37M, a decrease of 123K from May.
Unemployed workers are defined as those out of work who have looked for a
job & are available for hire. Trade, transportation & utilities
vacancies stood at 1.4M, while education & health services &
professional & business services were close behind with about 1.3M each.
There are still 1.4 million more jobs than unemployed people, but the gap is closing
Gold prices finished regular trade modestly higher, marking a 3rd straight gain a day after the precious metal extended its rally toward fresh 6-year highs, amid escalating trade policy tensions between China & the US. Gold for Dec delivery rose $7.70 (0.5%) to settle at $1484 after ending 1.3% higher yesterday, extending its highest finish for a most-active contract close since 2013. Bullion has been gaining traction on the back of worries that the US-China tariff conflict won't subside soon. An environment with debt yields also hovering at ultralow levels, & in many cases negative levels, also has supported buying of the yellow metal, which tends to rise during times of global economic uncertainty. Today, equity markets recovered some ground, after seeing the biggest one-day fall of the year yesterday, after China's central bank fixed its widely watched onshore currency at a level higher than expected, a move interpreted by some as a sign of some softening in trade tensions. Still, commodity traders said gold & other precious metals could prosper against a backdrop of weakening global economic growth & continued anxieties on intl trade with no immediate resolution in sight.
Gold futures book third straight gain, hold near 6-year high
Oil futures prices closed sharply lower — including a roughly 7-month low for intl benchmark Brent — as contracts gave up early gains once the stock market pared its recovery. Oil fell as questions persisted over global demand for energy, uncertainty that’s tied to US tensions with major trade partners. West Texas Intermediate (WTI) crude for Sep was down $1.06 (1.9%) to $53.63 a barrel, the lowest finish since Jun 17. WTI traded in positive territory briefly today, up to $55.42. Crude fell 1.7% yesterday & WTI is now off 19% from its 2019 settlement high of $66.30 hit on Apr 23. Global benchmark Oct Brent crude fell 87¢ (1.4%) at $58.94 a barrel, the lowest in 7 months. It traded up to $60.56 earlier, but has now shed 4.7% so far this week. That trims the YTD gain to about 9.5%. Oil prices remained lower as US gov data for the sector forecast growth in the Permian basin & other shale formations would largely offset production losses from the Gulf of Mexico due to Hurricane Barry. The Energy Information Administration (EIA) said in its short-term outlook issued today that Brent crude spot prices will average $64 a barrel in H2 & $65 in 2020. The forecast of stable crude oil prices is the result of EIA's expectations of a relatively balanced global oil market. EIA forecasts that WTI crude oil prices will average $5.50 per barrel less than Brent prices from Q4-2019 thru the end of 2020. That’s a wider gap than the $4 below Brent predicted in last month's report. The wider forecasted Brent-WTI differential reflects EIA updated assumptions about the marginal cost of transporting crude oil via pipeline from Cushing, Okla, to the Gulf Coast. Meanwhile, US crude-oil stocks likely fell for an 8th straight week last week amid an uptick in refinery utilization. Commercial crude inventories are expected to have declined 3.8M barrels last week. Further, a slowdown in crude exports likely limited the size of the expected draw. Exports last week averaged 1.97M barrels per day. If weekly EIA oil data bears this out, exports will be at their weakest since Jan & only the 2nd time this year that they have slipped under 2M b/d, according to EIA data.
Oil prices surrender recovery gains, tracking volatile stock market
Buyers returned in the PM & took the Dow to session highs in the last hour of trading. Markets breadth is so-so, could have been better. The bounce back is almost impressive. The Volatility Index (VIX) dropped 4+ to go under 20. But that compares with the low teens earlier this year. Gold continues to be in demand by negative thinking investors as the trade mess drones on!!
Dow Jones Industrials
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