Dow rose 37 (below session highs), decliners slightly ahead of decliners & NAZ lost 17. The MLP index went up 3+ to the 392s & the REIT index dropped 4+ to the 399s. Junk bond funds drifter lower & Treasuries were sold, taking the yield on the 10 year Treasury up 11 basis points to 1.9% (more below). Oil shed pennies, falling to 55 & gold sank 11 to 1495 (more on both below).
AMJ (Alerian MLP Index tracking fund)
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The yield on the benchmark 10-year Treasury note was poised for its largest weekly rally since Nov 2016 as investors checked prior concerns that the US was careening toward an economic downturn. The yield on the benchmark 10-year Treasury was higher to 1.84%, while the yield on the 30-year Treasury was also higher at 2.31%. The moves in the week's final day of trading bring the 10-year yield's week-to-date climb to over 30 basis points, its largest such move since Nov 2016. The 30-year bond yield is up nearly 32 basis points for the week, also its largest increase since autumn 2016. Bond yields rise as prices fall. Traders said that a reassessment of Aug's angst over the direction of the American economy & calmer trade rhetoric between the US & China help spur the week's marked selling. Last month's inverted yield curve, new tariffs between the US & China & grim diagnoses for GDP growth combined to fuel a pivot into safer assets like US debt. Investors also looked ahead to the Federal Reserve policy meeting next week, with central bankers widely expected to cut the overnight lending rate another 25 basis points on Wed. Such a cut would follow the ECB's move this week to begin a massive new bond-buying program in a bid to stimulate ailing euro zone economy.
10-year yield surges the most in a week since 2016 as investors reassess recession concerns
Gold futures ended lower, giving up earlier gains to feed a loss for the week as appetite returned for assets perceived as risky & bond yields climb. Gold pared some of its earlier gains then turned lower after data revealed that the Univ of Mich consumer sentiment index rebounded to 92 in Sep from 89.8 in Aug. US business inventories also increased by 0.4% in Jul & US retail sales rose 0.4% in Aug. Dec gold lost $7.90 (0.5%) to settle at $1499 an ounce, with the commodity suffering at a weekly decline of 1.1%. Meanwhile, the $ as measured by the ICE US Dollar Index, a gauge of the greenback against 6 rival currencies, registered a 0.2% weekly loss. It was also trading 0.7% lower month to date. A weaker $ can make dollar-pegged commodities more appealing to buyers using other currencies. Rising gov bond yields, which compete with gold for investors seeking safety, were undercutting demand for gold & other precious assets that don't bear a coupon. Geopolitical risks have also declined, weakening the bid for gold, as China moved to exempt US agricultural products from tariffs after reports of a potential interim trade deal. Pres Trump said yesterday that he was willing to consider an interim trade deal with China. Also, the ECB launched a batch of stimulus measures intended to bolster the eurozone economy, which is expected to influence policy actions by the Fed. Against that backdrop, assets considered risky have rallied, with the Dow had its 8th straight advance. That dynamic has taken away bidders from gold & bonds.
Gold ends lower, suffers a weekly loss as bond yields rise
Contract negotiations between the United Auto Workers & General Motors (GM) & are expected to run down to the wire as both sides work to get a deal before their current labor agreement expires just before midnight tomorrow. A lot is at stake with several scenarios that could play out over the weekend: they could reach a tentative deal, extend their current contract by days or weeks if the negotiations are close, or the last option neither side wants: strike. The union, if the talks aren't progressing, also could decide to move its focus to another automaker. All parties have been preparing for what are expected to be the most contentious negotiations in at least a decade amid a slowdown in auto sales, a volatile trade environment and a widening federal probe into union corruption that escalated yesterday as UAW Region 5 Director Vance Pearson was arrested & charged as part on the investigation. Despite ballooning health-care costs for many Americans & companies, UAW members with the Detroit automakers have retained a golden parachute when it comes to medical coverage. With little or no co-pays or deductibles, the auto workers only pay roughly 3% of their costs. That compares with the automakers' salaried workers, who pay roughly 20-30% & the average US worker at 28%.
US automakers face looming union deadline: Here’s what could make UAW strike Saturday
Oil futures finished lower, with both US & intl benchmark crude posting sizable weekly falls as worries about the prospect of rising inventories appeared to overshadow a US-China tariff detente. West Texas Intermediate crude for Oct fell 24¢ (0.4%) to settle at $54.85 a barrel for a roughly 3% weekly decline, tracking the front-active contract. Nov Brent crude shed 16¢ (0.3%) to $60.22 a barrel, with prices marking a weekly fall of 2.1%. The Joint Ministerial Monitoring Committee (JMMC) which monitors compliance with output reductions set by an OPEC+ agreement that began at the start of this year, yesterday “underscored the critical need for continued commitment” to the pledged production cuts. It said compliance with the cuts stood at 136% in Aug. Meanwhile, signs of cooling animosities between Beijing & DC, representing the largest economies in the world & big consumers of crude, have been a focus for oil traders because that conflict has threatened to hurting the global economy & damage demand for crude. China made further concessions to the US on intl trade today, adding agricultural products like soybeans & pork to the list of imports exempted tariffs, as prospects for at least an interim deal to resolve the 2 year old trade dispute improve. However, US rig-count data from Baker Hughes implied a slowdown in drilling rig activity. The data revealed that the number of active U.S. rigs drilling for oil declined by 5 to 733 this week, a 4th straight weekly decline.
Stock were looking for direction today. The Dow managed a gain, but finished below its early highs. China may buy more pork & soybeans, but a lot of work needs to be done before a trade agreement is signed. Meanwhile the trade agreement with Canada & Mexico is not getting much attention by congress when it is occupied with distractions. Then there is the federal budget which looks to be stuck in the mud. Funding runs out on Sep 30 & a gov shutdown is possible. The bulls are keeping the averages close to record highs. Data on the US economy is fairly good. Even with the decline of safe haven gold & Treasuries, dark clouds are still around.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The yield on the benchmark 10-year Treasury note was poised for its largest weekly rally since Nov 2016 as investors checked prior concerns that the US was careening toward an economic downturn. The yield on the benchmark 10-year Treasury was higher to 1.84%, while the yield on the 30-year Treasury was also higher at 2.31%. The moves in the week's final day of trading bring the 10-year yield's week-to-date climb to over 30 basis points, its largest such move since Nov 2016. The 30-year bond yield is up nearly 32 basis points for the week, also its largest increase since autumn 2016. Bond yields rise as prices fall. Traders said that a reassessment of Aug's angst over the direction of the American economy & calmer trade rhetoric between the US & China help spur the week's marked selling. Last month's inverted yield curve, new tariffs between the US & China & grim diagnoses for GDP growth combined to fuel a pivot into safer assets like US debt. Investors also looked ahead to the Federal Reserve policy meeting next week, with central bankers widely expected to cut the overnight lending rate another 25 basis points on Wed. Such a cut would follow the ECB's move this week to begin a massive new bond-buying program in a bid to stimulate ailing euro zone economy.
10-year yield surges the most in a week since 2016 as investors reassess recession concerns
Gold futures ended lower, giving up earlier gains to feed a loss for the week as appetite returned for assets perceived as risky & bond yields climb. Gold pared some of its earlier gains then turned lower after data revealed that the Univ of Mich consumer sentiment index rebounded to 92 in Sep from 89.8 in Aug. US business inventories also increased by 0.4% in Jul & US retail sales rose 0.4% in Aug. Dec gold lost $7.90 (0.5%) to settle at $1499 an ounce, with the commodity suffering at a weekly decline of 1.1%. Meanwhile, the $ as measured by the ICE US Dollar Index, a gauge of the greenback against 6 rival currencies, registered a 0.2% weekly loss. It was also trading 0.7% lower month to date. A weaker $ can make dollar-pegged commodities more appealing to buyers using other currencies. Rising gov bond yields, which compete with gold for investors seeking safety, were undercutting demand for gold & other precious assets that don't bear a coupon. Geopolitical risks have also declined, weakening the bid for gold, as China moved to exempt US agricultural products from tariffs after reports of a potential interim trade deal. Pres Trump said yesterday that he was willing to consider an interim trade deal with China. Also, the ECB launched a batch of stimulus measures intended to bolster the eurozone economy, which is expected to influence policy actions by the Fed. Against that backdrop, assets considered risky have rallied, with the Dow had its 8th straight advance. That dynamic has taken away bidders from gold & bonds.
Gold ends lower, suffers a weekly loss as bond yields rise
Contract negotiations between the United Auto Workers & General Motors (GM) & are expected to run down to the wire as both sides work to get a deal before their current labor agreement expires just before midnight tomorrow. A lot is at stake with several scenarios that could play out over the weekend: they could reach a tentative deal, extend their current contract by days or weeks if the negotiations are close, or the last option neither side wants: strike. The union, if the talks aren't progressing, also could decide to move its focus to another automaker. All parties have been preparing for what are expected to be the most contentious negotiations in at least a decade amid a slowdown in auto sales, a volatile trade environment and a widening federal probe into union corruption that escalated yesterday as UAW Region 5 Director Vance Pearson was arrested & charged as part on the investigation. Despite ballooning health-care costs for many Americans & companies, UAW members with the Detroit automakers have retained a golden parachute when it comes to medical coverage. With little or no co-pays or deductibles, the auto workers only pay roughly 3% of their costs. That compares with the automakers' salaried workers, who pay roughly 20-30% & the average US worker at 28%.
US automakers face looming union deadline: Here’s what could make UAW strike Saturday
Oil futures finished lower, with both US & intl benchmark crude posting sizable weekly falls as worries about the prospect of rising inventories appeared to overshadow a US-China tariff detente. West Texas Intermediate crude for Oct fell 24¢ (0.4%) to settle at $54.85 a barrel for a roughly 3% weekly decline, tracking the front-active contract. Nov Brent crude shed 16¢ (0.3%) to $60.22 a barrel, with prices marking a weekly fall of 2.1%. The Joint Ministerial Monitoring Committee (JMMC) which monitors compliance with output reductions set by an OPEC+ agreement that began at the start of this year, yesterday “underscored the critical need for continued commitment” to the pledged production cuts. It said compliance with the cuts stood at 136% in Aug. Meanwhile, signs of cooling animosities between Beijing & DC, representing the largest economies in the world & big consumers of crude, have been a focus for oil traders because that conflict has threatened to hurting the global economy & damage demand for crude. China made further concessions to the US on intl trade today, adding agricultural products like soybeans & pork to the list of imports exempted tariffs, as prospects for at least an interim deal to resolve the 2 year old trade dispute improve. However, US rig-count data from Baker Hughes implied a slowdown in drilling rig activity. The data revealed that the number of active U.S. rigs drilling for oil declined by 5 to 733 this week, a 4th straight weekly decline.
Oil logs a weekly loss amid worries about rise in supplies
Stock were looking for direction today. The Dow managed a gain, but finished below its early highs. China may buy more pork & soybeans, but a lot of work needs to be done before a trade agreement is signed. Meanwhile the trade agreement with Canada & Mexico is not getting much attention by congress when it is occupied with distractions. Then there is the federal budget which looks to be stuck in the mud. Funding runs out on Sep 30 & a gov shutdown is possible. The bulls are keeping the averages close to record highs. Data on the US economy is fairly good. Even with the decline of safe haven gold & Treasuries, dark clouds are still around.
Dow Jones Industrials
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