Dow climbed 115, advancers over decliners 5-4 & NAZ rose 61. The MLP index fell 1 to the 234s & the REIT index recovered 1 to the 403s. Junk bond funds inched higher in price & Treasuries slid lower again. Oil was fractionally lower to 55 & gold shot up 10 to 1513 (more below).
AMJ (Alerian MLP Index tracking fund)
European Central Bank cuts its deposit rate, launches new bond-buying program
Gold futures were on track to mark a 2nd consecutive gain after the ECB cut eurozone interest rates & delivered a batch of measures intended to boost the region's sluggish economy, bullish moves for bullion. The ECB cut its deposit rate further into negative territory, decreasing it by 10 basis points to negative 0.5%, while also announcing it would restart its monthly bond-buying program as it attempts to juice inflation & European expansion. Dec gained $21 an ounce (1.4%) at $1524 an ounce, after rising 0.3% yesterday. A rally for gold comes as the $ briefly scored a post-ECB gain then weakened & US stock indexes traded on a mixed note. Expectations that the Federal Reserve may be influenced by the ECB helped to drive bond yields lower, offering support for bullion, which doesn't offer a yield. The 10-year Treasury note yield was down 2 basis points to 1.7153% today from 1.733% yesterday. Policy measures implemented by the ECB come ahead of the Fed's monetary policy gathering, where the central bank is widely expected to cut interest rates by 25 basis points on Sep 18. Reductions to global interest rates & some $17T in gov debt that offers a negative yield have helped to bolster appetite for alternatives assets like gold, considered a haven during times of economic uncertainty Trading for precious metals also comes as Pres Trump said late Wednesday that the US would delay implementing fresh tariffs until Oct 15 on $250B in China goods that were due to take effect on Oct 1. Trump's action was taken by the market as a reflection of softening tariff tensions amid the Sino-American trade clash & comes ahead of a new round of negotiations between the world's superpowers to resolve the conflict that is set to take place at an unspecified date in early Oct.
Stocks are in demand once again. This time on news of some healing in the US-China trade dispute. But market breadth is weak, indicating investors aren't completely sold on the story. The ECB press release also warmed the hearts of US investors . The bulls have taken the Dow higher,.just 110 below the Jul record & they are eager to set another new record.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 54.43 | -1.32 | -2.4% |
| GC=F | Gold | 1,523.60 | +20.40 | +1.4% |
Pres Trump said China will start purchasing US farm goods “in large amounts.” His
comments came after his decision to delay increasing tariffs on $250B worth of Chinese goods from Oct 1-15 as a “gesture of
good will” to China. China's Ministry of Commerce said Chinese companies have started asking prices of American agricultural
products including soybeans & pork. The country halted the purchases
in Aug when Trump abruptly ended the cease-fire. China’s agriculture
buying has been a sticking point in the trade battle as Trump has
repeatedly accused China of not following thru its promise. “Now
as it relates to agriculture, we expect and we want them to buy
agriculture; We view that as a personal attack on our farmers,” Treasury
Secretary Steve Mnuchin said. “They need our agriculture ... This isn’t about just selling
them soybeans, but we do want to sell them soybeans,” he added. The 2 countries agreed to meet in early Oct
in DC & hold deputy-level discussions leading up to the
meeting to lay the groundwork. Some insiders & observers expect this
round of negotiation can lead to a breakthrough. China's
Vice Premier Liu He, the nation's top trade negotiator, said the deputy-level talks next week will surround issues including trade
balance, market access & investor protection, China's state-run media
Xinhua said. Mnuchin also said Trump could do a China trade pact at any time, but wants a “good” deal for US workers.
The ECB announced a massive new bond-buying program in a bid to stimulate the ailing euro zone economy. The
central bank's quantitative easing (QE) program will entail €20B ($21.9B) per month of net asset purchases for as long as it
deems necessary. The ECB also cut its main deposit rate by 10 basis points to -0.5%, a record low but in line with market expectations. It
now expects interest rates to remain at their present or lower levels
until it has seen its inflation outlook “robustly converge to a level
sufficiently close to but below 2% within its projection horizon, and
such convergence has been persistent.” In line with market expectations, the ECB also
introduced a 2-tier rate system, a measure encouraged by the heads of
various major European banks during the latest earnings season. The move
is intended to alleviate some of the pressure of negative interest
rates on the balance sheets of European banks, which have seen profits
squeezed by the persistent low rate environment. Draghi added in
his press conference: “In order to support the bank-based transmission
of monetary policy, the Governing Council decided to introduce a
two-tier system for reserve remuneration, in which part of banks’
holdings of excess liquidity will be exempt from the negative deposit
facility rate.”
European Central Bank cuts its deposit rate, launches new bond-buying program
Gold futures were on track to mark a 2nd consecutive gain after the ECB cut eurozone interest rates & delivered a batch of measures intended to boost the region's sluggish economy, bullish moves for bullion. The ECB cut its deposit rate further into negative territory, decreasing it by 10 basis points to negative 0.5%, while also announcing it would restart its monthly bond-buying program as it attempts to juice inflation & European expansion. Dec gained $21 an ounce (1.4%) at $1524 an ounce, after rising 0.3% yesterday. A rally for gold comes as the $ briefly scored a post-ECB gain then weakened & US stock indexes traded on a mixed note. Expectations that the Federal Reserve may be influenced by the ECB helped to drive bond yields lower, offering support for bullion, which doesn't offer a yield. The 10-year Treasury note yield was down 2 basis points to 1.7153% today from 1.733% yesterday. Policy measures implemented by the ECB come ahead of the Fed's monetary policy gathering, where the central bank is widely expected to cut interest rates by 25 basis points on Sep 18. Reductions to global interest rates & some $17T in gov debt that offers a negative yield have helped to bolster appetite for alternatives assets like gold, considered a haven during times of economic uncertainty Trading for precious metals also comes as Pres Trump said late Wednesday that the US would delay implementing fresh tariffs until Oct 15 on $250B in China goods that were due to take effect on Oct 1. Trump's action was taken by the market as a reflection of softening tariff tensions amid the Sino-American trade clash & comes ahead of a new round of negotiations between the world's superpowers to resolve the conflict that is set to take place at an unspecified date in early Oct.
Gold prices climb by more than 1% after ECB unleashes basket of easy-money measures
Stocks are in demand once again. This time on news of some healing in the US-China trade dispute. But market breadth is weak, indicating investors aren't completely sold on the story. The ECB press release also warmed the hearts of US investors . The bulls have taken the Dow higher,.just 110 below the Jul record & they are eager to set another new record.
Dow Jones Industrials
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