Dow advanced 45 (120 under earlier highs), advancers slightly ahead of decliners & NAZ rose 24. The MLP index fell 1+ to the 233s & the REIT index went up, gaining 2+ to the 404s. Junk bond funds remained higher & Treasuries were sold again, taking the yield on the 10 year Treasury to almost 1.8%. Oil pulled back in the 55s & gold added 3 to 1506.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The US gov's red ink for fiscal 2019 swelled past the $1T mark in Aug, the first time that level has been eclipsed in 7 years, the Treasury Dept reported. The total shortfall rose to nearly $1.07T, thanks to a difference between revenue & expenses of more than $214B in Aug. The gov last saw that large of a fiscal deficit in 2012, when the gap was nearly $1.1T. During his presidential campaign, Pres Trump promised economic growth that would easily take care of the tax cuts & new spending he planned. His 2017 tax break for corps & individuals has helped contribute to a deficit that has grown from $584B in 2016. Revenue has accelerated slightly in 2019 to about $280B a month, but so have expenditures, which are averaging $377B a month, or about $25B a month more than in 2018. Last year closed with a $779B deficit. As the deficit has grown so has the national debt, which is now at $22.5T, up 13% since Trump took office. However, the deficit as a percentage of GDP has contracted significantly over the past several years, from a peak of 9.8% in 2009 to about 5% currently.
Budget deficit smashes $1 trillion mark, the highest in seven years
Mnuchin says the Treasury is ‘seriously considering’ issuing a 50-year bond next year
While stocks had a good day, there was selling in the last hour. Additionally, the advance-decline ratio was weak. The Chinese are giving a little in trade negotiations & the ECB is willing to thow more money out there to help lagging euro economies (as usual). The Dow is staying close to its recent record & the bulls can take it over the top any time they want. However, safe have gold is still above 1500, in demand by negative thinking investors
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The trade war between the US & China is showing signs of easing. In recent days, the 2 sides have softened their stance. Investors drew encouragement from China's decision to exempt some US products from a recent round of tariffs. As a gesture of "goodwill," Pres Trump said on Twitter yesterday
that the US agreed to a 2-week delay in a planned increase
in tariffs on some Chinese imports. The Chinese Commerce Ministry responded this AM saying that it welcomes a delay in US tariffs on Chinese goods. Trump said in a tweet today that he expects China to buy "large amounts" of products from American farmers. "It is expected that China will be buying large amounts of our agricultural products!" he tweeted. A Ministry spokesman said Chinese companies have
started making price inquiries for farm products which could lead to
China buying pork & soybeans. Beijing suspended the purchases in Aug when bilateral tensions escalated sharply.
The US gov's red ink for fiscal 2019 swelled past the $1T mark in Aug, the first time that level has been eclipsed in 7 years, the Treasury Dept reported. The total shortfall rose to nearly $1.07T, thanks to a difference between revenue & expenses of more than $214B in Aug. The gov last saw that large of a fiscal deficit in 2012, when the gap was nearly $1.1T. During his presidential campaign, Pres Trump promised economic growth that would easily take care of the tax cuts & new spending he planned. His 2017 tax break for corps & individuals has helped contribute to a deficit that has grown from $584B in 2016. Revenue has accelerated slightly in 2019 to about $280B a month, but so have expenditures, which are averaging $377B a month, or about $25B a month more than in 2018. Last year closed with a $779B deficit. As the deficit has grown so has the national debt, which is now at $22.5T, up 13% since Trump took office. However, the deficit as a percentage of GDP has contracted significantly over the past several years, from a peak of 9.8% in 2009 to about 5% currently.
Budget deficit smashes $1 trillion mark, the highest in seven years
The US could be issuing 50-year bonds as soon as
next year as the gov looks for cheaper & longer-term ways to
finance its burgeoning debt load, Treasury Secretary Steve Mnuchin said. “This is something I have talked about over the last two years, it is something we are very seriously considering,” he added.
“We’re looking at issuing a 50-year bond, what we could call an
ultra-long bond. We think there is some demand for it. It is something
we’ll very seriously consider for next year.” His comments come a day after Pres Trump tweeted that he thinks the US should look at “refinancing” its debt load, which has recently eclipsed the $22.5T mark. Gov bond yields moved lower as Mnuchin spoke. Though
it's unlikely the gov could engage in that process the way a
homeowner would refinance a mortgage, Treasury could extend the maturity
of the debt by issuing longer-term bonds. The longest duration the
gov has now is the 30-year bond. More than a dozen other
developed countries have issued “ultra” bonds of durations from 40-100 years. Canada issued a 50-year bond in 2014 while Mexico, Belgium & Ireland have offered 100-year debt in recent years. Multiple
companies also have issued 100-year bonds. One of the objectives for the US would be to widen credit spreads.
That might help revert a trend in which some short-term gov debt
is yielding more than longer-duration notes, a phenomenon called an
inverted yield curve that has been a reliable recession indicator over
the past 50 years. “We would do this in a way that if there is
demand it’s something that we would meet. I personally think it would be
a good thing to expand the U.S.′ borrowing capabilities,” Mnuchin said.
“I would say it’s obviously quite attractive for us to extend and
derisk the U.S. Treasury borrowing. So we’re also looking at extending
the weighted average maturity of the Treasury borrowing to derisk this
for the U.S. people.”
Mnuchin says the Treasury is ‘seriously considering’ issuing a 50-year bond next year
While stocks had a good day, there was selling in the last hour. Additionally, the advance-decline ratio was weak. The Chinese are giving a little in trade negotiations & the ECB is willing to thow more money out there to help lagging euro economies (as usual). The Dow is staying close to its recent record & the bulls can take it over the top any time they want. However, safe have gold is still above 1500, in demand by negative thinking investors
Dow Jones Industrials
No comments:
Post a Comment