Dow sank 280 (500 below session highs), decliners over advancers better than 3-2 & NAZ lost 64. The MLP index dropped 3+ to the 244s & the REIT index was flattish at 389. Junk bond funds hardly changed in price & Treasuries skyrocketed in price, taking the yield on the 10 year Treasury below 1.9% (more below). Oil plunged 4+ to the 54s on the tariff news (more below) & gold soared 16 to 1454.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The Senate approved a 2-year budget deal that set new spending limits & suspended limits on The US's borrowing capabilities. The massive, bipartisan legislation passed the Rep-controlled Senate by a margin of 67-28 & will now go to Pres Trump's desk for his signature. Altogether, the bill increases discretionary spending limits by nearly $324B over the next 2 years & raises the debt ceiling well beyond the 2020 presidential election. It allocates about $1.37T in funding for the first year, with $738B for defense spending & $632B in non-defense spending. "Given the exigencies of divided government, we knew that any bipartisan agreement on funding levels would not appear perfect to either side. But the administration negotiated a strong deal, ” Senate Majority Leader Mitch McConnell said. Although some conservative Reps worried the package was too expensive — FreedomWorks, a conservative policy group, called the budget deal a "disgrace" — Trump urged them to pass it ahead of the vote. "There is always plenty of time to CUT!" he wrote. The conservative House Freedom Caucus took an official position opposing the budget deal. The US was expected to hit the debt ceiling in early Sep, so establishing an agreement on spending levels could help Congress avert another gov shutdown — lawmakers still need to pass individual spending bills to avoid an Oct 1 shutdown, but the spending deal could help reduce the chances of that.
Crude oil plunged on concerns the global economy would weaken further after Pres Trump ended a tariff ceasefire with China. The pres said additional tariffs of 10% on the remaining $300B in Chinese goods would be added in Sep. Futures for WTI crude dropped 7.9% to $53.95, breaking a 5-day winning streak - its worst daily performance in more than 4 years. Brent crude, the intl benchmark, also fell more than 6% to $60.67 following Trump's tweets. “Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country...We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!” Trump tweeted. Although the trade war with China has been going on for over a year, in May, Pres Trump hiked tariffs to 25% from 10% on $250B in Chinese goods. China immediately retaliated with tariffs on US goods. Trade talks resumed this week in Shanghai & although the White House called the talks “constructive” Trump added “sadly, China decided to re-negotiate the deal prior to signing” which caused him to impose new tariffs. Earlier today, oil was down because the Federal Reserve dampened hopes for a string of interest rate cuts. The Fed lowered interest rates 25 basis points yesterday but did not signal it was entering a deep easing cycle.
Oil plunges the most in 4 years after Trump’s new China tariffs raise fears of a global slowdown
The yield on the benchmark 10-year Treasury note fell to its lowest level since 2016 after Pres Trump announced new tariffs on Chinese goods. The pres said that 10% duties will be imposed on $300B worth of Chinese goods, effective Sep 1. His tweets came after a US delegation met with Chinese trade officials earlier this week. Around 2:30 PM, the yield on the benchmark 10-year Treasury note had fallen approximately 15 basis points to 1.878%, its lowest level since Nov 2016. The yield on the 30-year Treasury bond, which clinched its lowest level since Oct 2016, last traded at 2.428%. It hit a low of 2.422% earlier in the session. Yields were also under pressure after the Fed in the prior session cut interest rates for the first time since 2008. In approving the cut, the FOMC pointed to “implications of global developments for the economic outlook as well as muted inflation pressures.” It also characterized economic growth as “moderate” & the labor market “strong,” but eased policy regardless. The 2-year Treasury note yield, more representative of changes to Fed policy, fell 16 basis points to 1.72%, off an earlier low of 1.694%, its lowest since Nov 2017. The policymaking committee made explicit reference to inflation, a threat to bonds as rising prices chip away at the real value of their fixed payments.
10-year Treasury yield dives to lowest level since 2016 after Trump announces new China tariffs
China's manufacturing activity contracted in Jul, according to results of a private survey. The Caixin/Markit factory Purchasing Managers’ Index (PMI) was 49.9 in Jul — slightly better than expected, but still in contractionary territory. The forecast was for the indicator to come in at 49.6. The reading for Jun was 49.4. PMI readings above 50 indicate expansion, while those below that signal contraction. Data from the Chinese statistics bureau showed official manufacturing PMI contracted for 3 straight months, coming in at 49.6 for the month of Jul. For China, the PMI is among economic indicators that investors globally watch closely for signs of trouble amid domestic headwinds & the ongoing US-China trade dispute.
China’s factory activity contracted in July, a private survey shows
Stocks began the new month with buyers bidding up prices following yesterday's selloff. Then came the announcement on the new tariffs & the Dow plunged 500. Buyers went home & have not returned. As expected, safe haven gold & Treasuries were in heavy demand. There is a lot to digest. The Dow is down 3% from its high in mid Jul & suddenly the new month is shaping up as looking to be a very choppy time for stocks.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The US gov is prepared to implement tariffs on another $300B worth of goods from China as negotiations between the 2 largest economies sputter. Pres
Trump took to Twitter to announce the new round of 10% tariffs, after US representatives returned home from meeting
with the delegation in Shanghai. The pres
said China decided to renegotiate the deal before signing, & had
agreed to buy more agricultural products from the US– but has not yet
done so. The Dept of Agriculture confirmed a small sale of soybeans to China, the first in more than a year. Pres Xi
Jinping promised to ramp up larger-scale purchases during the G-20
summit in Japan to help advance trade talks. Trump
sounded an optimistic note, classifying the dialogue as "positive" &
the future as "very bright." The White House said negotiations will
continue in DC next month. The US has already implemented 25% tariffs on $250B worth of Chinese goods. The new round of tariffs is expected to take effect on Sep 1. The pres has noted that this round of tariffs could hit large US corps
is expected that Trade Representative Robert Lighthizer will come
up with a list of items that will be subject to the tariffs.
TRUMP ANNOUNCES CHINA TARIFFS ON REMAINING $300B WORTH OF GOODS
The Senate approved a 2-year budget deal that set new spending limits & suspended limits on The US's borrowing capabilities. The massive, bipartisan legislation passed the Rep-controlled Senate by a margin of 67-28 & will now go to Pres Trump's desk for his signature. Altogether, the bill increases discretionary spending limits by nearly $324B over the next 2 years & raises the debt ceiling well beyond the 2020 presidential election. It allocates about $1.37T in funding for the first year, with $738B for defense spending & $632B in non-defense spending. "Given the exigencies of divided government, we knew that any bipartisan agreement on funding levels would not appear perfect to either side. But the administration negotiated a strong deal, ” Senate Majority Leader Mitch McConnell said. Although some conservative Reps worried the package was too expensive — FreedomWorks, a conservative policy group, called the budget deal a "disgrace" — Trump urged them to pass it ahead of the vote. "There is always plenty of time to CUT!" he wrote. The conservative House Freedom Caucus took an official position opposing the budget deal. The US was expected to hit the debt ceiling in early Sep, so establishing an agreement on spending levels could help Congress avert another gov shutdown — lawmakers still need to pass individual spending bills to avoid an Oct 1 shutdown, but the spending deal could help reduce the chances of that.
Senate passes two-year budget deal, sending bill to Trump's desk
Crude oil plunged on concerns the global economy would weaken further after Pres Trump ended a tariff ceasefire with China. The pres said additional tariffs of 10% on the remaining $300B in Chinese goods would be added in Sep. Futures for WTI crude dropped 7.9% to $53.95, breaking a 5-day winning streak - its worst daily performance in more than 4 years. Brent crude, the intl benchmark, also fell more than 6% to $60.67 following Trump's tweets. “Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country...We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!” Trump tweeted. Although the trade war with China has been going on for over a year, in May, Pres Trump hiked tariffs to 25% from 10% on $250B in Chinese goods. China immediately retaliated with tariffs on US goods. Trade talks resumed this week in Shanghai & although the White House called the talks “constructive” Trump added “sadly, China decided to re-negotiate the deal prior to signing” which caused him to impose new tariffs. Earlier today, oil was down because the Federal Reserve dampened hopes for a string of interest rate cuts. The Fed lowered interest rates 25 basis points yesterday but did not signal it was entering a deep easing cycle.
Oil plunges the most in 4 years after Trump’s new China tariffs raise fears of a global slowdown
The yield on the benchmark 10-year Treasury note fell to its lowest level since 2016 after Pres Trump announced new tariffs on Chinese goods. The pres said that 10% duties will be imposed on $300B worth of Chinese goods, effective Sep 1. His tweets came after a US delegation met with Chinese trade officials earlier this week. Around 2:30 PM, the yield on the benchmark 10-year Treasury note had fallen approximately 15 basis points to 1.878%, its lowest level since Nov 2016. The yield on the 30-year Treasury bond, which clinched its lowest level since Oct 2016, last traded at 2.428%. It hit a low of 2.422% earlier in the session. Yields were also under pressure after the Fed in the prior session cut interest rates for the first time since 2008. In approving the cut, the FOMC pointed to “implications of global developments for the economic outlook as well as muted inflation pressures.” It also characterized economic growth as “moderate” & the labor market “strong,” but eased policy regardless. The 2-year Treasury note yield, more representative of changes to Fed policy, fell 16 basis points to 1.72%, off an earlier low of 1.694%, its lowest since Nov 2017. The policymaking committee made explicit reference to inflation, a threat to bonds as rising prices chip away at the real value of their fixed payments.
10-year Treasury yield dives to lowest level since 2016 after Trump announces new China tariffs
China's manufacturing activity contracted in Jul, according to results of a private survey. The Caixin/Markit factory Purchasing Managers’ Index (PMI) was 49.9 in Jul — slightly better than expected, but still in contractionary territory. The forecast was for the indicator to come in at 49.6. The reading for Jun was 49.4. PMI readings above 50 indicate expansion, while those below that signal contraction. Data from the Chinese statistics bureau showed official manufacturing PMI contracted for 3 straight months, coming in at 49.6 for the month of Jul. For China, the PMI is among economic indicators that investors globally watch closely for signs of trouble amid domestic headwinds & the ongoing US-China trade dispute.
China’s factory activity contracted in July, a private survey shows
Stocks began the new month with buyers bidding up prices following yesterday's selloff. Then came the announcement on the new tariffs & the Dow plunged 500. Buyers went home & have not returned. As expected, safe haven gold & Treasuries were in heavy demand. There is a lot to digest. The Dow is down 3% from its high in mid Jul & suddenly the new month is shaping up as looking to be a very choppy time for stocks.
Dow Jones Industrials
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