Dow went up 49, decliners barely ahead of advancers & NAZ lost 28. The MLP index was off 2+, falling back to 230, & the REIT index rose 1+ to 402. Junk bond funds drifted lower & Treasuries rose slightly in price, bringing the yield on the 10 year Treasury up 3 basis points to 1.61%. Oil slid lower in the 55s & gold fell 6 to 1508, still near its 6+ year highs, (more below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
US manufacturer growth slowed to the lowest level in almost 10 years in Aug, the latest sign that the trade war may be exacerbating the economic slowdown. The US manufacturing PMI (purchasing managers' index) was 49.9 in Aug, down from 50.4 in Jul & below the neutral 50.0 threshold for the first time since 2009, according to IHS Markit. Any reading below 50 signals a contraction. The survey is an initial reading for the month of Aug. The final figure will be released Sep 3. “Manufacturing companies continued to feel the impact of slowing global economic conditions,” Tim Moore, economics associate director at Markit, said. “August’s survey data provides a clear signal that economic growth has continued to soften in the third quarter.” Manufacturing had been one of the big winners during the Trump administration, but the tariffs in the US-China trade war have taken a big bite from the sector. US manufacturing activity slowed to a nearly 3-year low in Jul, based on data from the Institute for Supply Management. But this fresh survey showed new orders received by manufacturers dropped the most in 10 years, while the data also showed export sales tanked to the lowest level since 2009. Investors track PMI readings to get early indicators as to where the economy is headed. After the Markit reading, stocks fell & the yield curve inverted. “The most concerning aspect of the latest data is a slowdown in new business growth to its weakest in a decade, driven by a sharp loss of momentum across the service sector,” Moore said. “Survey respondents commented on a headwind from subdued corporate spending as softer growth expectations at home and internationally encouraged tighter budget setting.” Manufacturers continued to reduce their inventories this month, which was mainly attributed to concerns about the demand outlook, according to Markit. The overall economy is still showing a slight expansion because of help from the service industry. US overall business activity growth also fell to a 3-month low as the seasonally adjusted IHS Markit Flash US Composite PMI Output Index dropped to 50.9 in Aug, signalling a “renewed slowdown” in the rate of US private sector business activity growth, Markit said.
Manufacturing sector contracts for the first time in nearly a decade
Fed’s Harker doesn’t see need for another rate cut, says central bank should stay here ‘for a while’
Gold futures posted their lowest settlement in nearly 2 weeks, pressured by strength in bond yields as the Fed's symposium of central bankers got under way in Jackson Hole, Wyoming. Minutes from the FOMC's Jul meeting were released yesterday. Treasury bonds weakened today, sending the benchmark 10-year Treasury note yield up 2.4 basis points to 1.6046%. Rising bond yields can dull the luster of gold, which offers no yield. Dec gold fell $7.20 (0.5%) to settle at $1508 an ounce after trading as low as $1502. Prices finished at the lowest for a most-active contract in 2 weeks. Gold futures trade 1.5% lower week to date, but have gained roughly 5% for the month so far. Lower interest rates & uncertainty about the economic landscape have helped to bolster gold prices because the precious metal is perceived as a haven asset & because shrinking debt yields can make metals more attractive as an investment because they offer no coupon.
Dallas Fed Pres Robert Kaplan would like to avoid addition stimulus but is keeping an “open mind.” “I’d like to avoid having to take further action but I think I’m going to have an open mind about taking action over the next number of months if we need to,” Kaplan said from the Fed's economic policy symposium in Jackson Hole. Earlier today, Kansas City Fed Pres Esther George said the Jul rate cut “wasn’t required ” & Philadelphia Fed Pres Patrick Harker said he doesn't see the case for additional stimulus. Following their comments, the bond market’s main yield curve inverted briefly for the 3rd time in less than 2 weeks on concern that maybe the Fed wouldn't do enough to save the economy from a recession. Kaplan is a nonvoting member this year of the FOMC.
Dallas Fed’s Kaplan says he’d like to avoid cutting rates again in September, but has ‘open mind’
Boeing (BA) shot up 14, giving the Dow much of its advance today. Otherwise, the main excitement was from Jackson Hole & that was an unclear message about the next rate cut (if any). Chair J Powell will give his big speech tomorrow & that should be the prime mover for stocks. The Dow is up about 365 so far this week, but down for the month (see below).
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
US manufacturer growth slowed to the lowest level in almost 10 years in Aug, the latest sign that the trade war may be exacerbating the economic slowdown. The US manufacturing PMI (purchasing managers' index) was 49.9 in Aug, down from 50.4 in Jul & below the neutral 50.0 threshold for the first time since 2009, according to IHS Markit. Any reading below 50 signals a contraction. The survey is an initial reading for the month of Aug. The final figure will be released Sep 3. “Manufacturing companies continued to feel the impact of slowing global economic conditions,” Tim Moore, economics associate director at Markit, said. “August’s survey data provides a clear signal that economic growth has continued to soften in the third quarter.” Manufacturing had been one of the big winners during the Trump administration, but the tariffs in the US-China trade war have taken a big bite from the sector. US manufacturing activity slowed to a nearly 3-year low in Jul, based on data from the Institute for Supply Management. But this fresh survey showed new orders received by manufacturers dropped the most in 10 years, while the data also showed export sales tanked to the lowest level since 2009. Investors track PMI readings to get early indicators as to where the economy is headed. After the Markit reading, stocks fell & the yield curve inverted. “The most concerning aspect of the latest data is a slowdown in new business growth to its weakest in a decade, driven by a sharp loss of momentum across the service sector,” Moore said. “Survey respondents commented on a headwind from subdued corporate spending as softer growth expectations at home and internationally encouraged tighter budget setting.” Manufacturers continued to reduce their inventories this month, which was mainly attributed to concerns about the demand outlook, according to Markit. The overall economy is still showing a slight expansion because of help from the service industry. US overall business activity growth also fell to a 3-month low as the seasonally adjusted IHS Markit Flash US Composite PMI Output Index dropped to 50.9 in Aug, signalling a “renewed slowdown” in the rate of US private sector business activity growth, Markit said.
Manufacturing sector contracts for the first time in nearly a decade
Philadelphia Fed Pres Patrick Karkerident said that while he went along with the central bank's rate cut
in Jul, he doesn't see the case for additional stimulus. “We’re
roughly where neutral is. It’s hard to know exactly where neutral is,
but I think we’re roughly where neutral is right now. And I think we
should stay here for a while and see how things play out,” Harker said at Jackson Hole, Wyoming. At its Jul policy meeting the Federal Reserve appeased markets by cutting the target range for its overnight lending rate 25 basis points,
to 2-2.25%. This marked the first rate cut since
the start of the financial crisis more than a decade ago. Harker,
who isn’t a voting member of the FOMC, said
that while he offered tepid support for the central bank's 25 basis
point cut in Jul, he’d prefer to wait & see before advocating for
more easing. Asked if he sees a case for further stimulus, Harker replied “No. Not right now.” “The labor markets are strong, inflation is moving up slowly — but with the last CPI print, it was a good print,” he added. Following Harker’s comments, the bond market's main yield curve inverted for the 3rd time in less than 2 weeks. The yield on the 2-year Treasury was at 1.601% while the 10-year yield was below at 1.597%. Harker
was not the only central banker commenting on the level of interest
rates. Bonds ticked up after Kansas City Fed Pres Esther George said the Jul rate cut was not “required. Though
investors remained confident that the central bank will cut
again in Sep, those expectations waned after the Fed commentary. Traders
were pricing in a 90% probability of a 25 basis point cut following
Harker's & George's comments,
down about 8 percentage points from the prior session.
Fed’s Harker doesn’t see need for another rate cut, says central bank should stay here ‘for a while’
Gold futures posted their lowest settlement in nearly 2 weeks, pressured by strength in bond yields as the Fed's symposium of central bankers got under way in Jackson Hole, Wyoming. Minutes from the FOMC's Jul meeting were released yesterday. Treasury bonds weakened today, sending the benchmark 10-year Treasury note yield up 2.4 basis points to 1.6046%. Rising bond yields can dull the luster of gold, which offers no yield. Dec gold fell $7.20 (0.5%) to settle at $1508 an ounce after trading as low as $1502. Prices finished at the lowest for a most-active contract in 2 weeks. Gold futures trade 1.5% lower week to date, but have gained roughly 5% for the month so far. Lower interest rates & uncertainty about the economic landscape have helped to bolster gold prices because the precious metal is perceived as a haven asset & because shrinking debt yields can make metals more attractive as an investment because they offer no coupon.
Gold posts lowest finish in nearly 2 weeks as bond yields climb
Dallas Fed Pres Robert Kaplan would like to avoid addition stimulus but is keeping an “open mind.” “I’d like to avoid having to take further action but I think I’m going to have an open mind about taking action over the next number of months if we need to,” Kaplan said from the Fed's economic policy symposium in Jackson Hole. Earlier today, Kansas City Fed Pres Esther George said the Jul rate cut “wasn’t required ” & Philadelphia Fed Pres Patrick Harker said he doesn't see the case for additional stimulus. Following their comments, the bond market’s main yield curve inverted briefly for the 3rd time in less than 2 weeks on concern that maybe the Fed wouldn't do enough to save the economy from a recession. Kaplan is a nonvoting member this year of the FOMC.
Dallas Fed’s Kaplan says he’d like to avoid cutting rates again in September, but has ‘open mind’
Boeing (BA) shot up 14, giving the Dow much of its advance today. Otherwise, the main excitement was from Jackson Hole & that was an unclear message about the next rate cut (if any). Chair J Powell will give his big speech tomorrow & that should be the prime mover for stocks. The Dow is up about 365 so far this week, but down for the month (see below).
Dow Jones Industrials
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