Dow rose 182 (but 100 below earlier highs), advancers over decliners a mild 5-4 & NAZ went up 23. The MLP index dropped 2+ to 210 (11 year low) & the REIT index declined 4+ to the 398s. Junk bond funds fluctuated & Treasuries were heavily sold with the yield on the 10 year Treasury soaring 11 basis points to 1.92+% (more below). Oil climbed higher in the 56s & gold tumbled 22 to 1470, lowest close in 3 months (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Chinese importers bought 136K metric tons of soybeans last week as trade talks between the US & China moved toward a phase one deal. Soybean futures traded at the Chicago Mercantile Exchange were up 0.3%, above $9.30 a bushel. Soybean purchases by China have been ramped up in recent weeks as the 2 sides have moved closer to a deal. China bought more than 1.5M metric tons in the final week of Sep & have continued to purchase the legume thru Oct. Earlier this year, China stopped buying soybeans as trade tensions ratcheted higher. The US & China are said to be putting the finishing touches on a partial trade deal, which they hope to sign later this month. Full details of an agreement haven't been disclosed yet, but Beijing is said to be making concessions on financial services & agriculture. The US agreed not to raise existing duties on $250B of Chinese goods from 25-30% on Oct 15. A decision has not been made on tariffs on $160B scheduled for Dec 15. "The agriculture chapter is virtually completed,” White House economic adviser Larry Kudlow said, adding that the financial services and currency stability parts were "virtually wrapped up." Kudlow added that talks involving the forced transfer of technology have seen "some progress," but will likely be completed during the 2nd part of an agreement. Pres Trump has said a comprehensive deal could be done in 2 or 3 parts. The timeline for a phase one agreement was thrown into question after the Asia-Pacific Economic Cooperation summit, which was scheduled for later this month & is where Trump & Chinese Pres Xi Jinping had hoped to sign the deal, was canceled due to unrest in the host country, Chile.
Consumer borrowing grew in Sep at the slowest rate in 15 months, according to Federal Reserve data. Total consumer credit increased $9.5B, down from $17.8B in Aug. The forecast called for a $15B gain. The Sep gain was well below the monthly average growth for the first 8 months of the year of around $16B which translates into an annual growth rate of 2.8%, the slowest since Jun 2018. Revolving credit, like credit cards, fell for the 2nd straight month in Sep. Borrowing fell 1.2% after falling 2.5% in Aug, the 3rd decline in revolving credit in the past 4 months. Nonrevolving credit, typically auto & student loans, rose 4.2% in Sep, the slowest rate in 4 months. The data does not include mortgage loans. With business investment sagging, all eyes are on the consumer to keep the expansion on track. Fed Chair Jerome Powell said last week that the Fed hasn't seen the weakness from business spending “getting into the consumer side of the economy." But many economists worry about increasing layoffs in coming months. For now, low unemployment & solid wage growth has consumers on a solid footing. Banks have been tightening standards on credit cards all year, according to the Fed's latest senior loan officer survey, despite delinquencies being near historic lows.
Gold futures dropped to post their lowest finish in 3 months & largest weekly percentage decline in more than a year. Renewed optimism about a near-term, partial US-China trade agreement stirred a rise in debt yields, dulling the appeal of precious metals. Today, China & the US agreed to lift some tariffs on one another in stages if the 2 countries reach a partial trade deal. “This is what [the two sides] agreed on following careful and constructive negotiations over the past two weeks,” said China Ministry spokesman Gao Feng, during a regularly scheduled news briefing. Dec gold declined $26.70 (1.8%) to settle at $1466 an ounce, more than wiping out its 0.6% gain from yesterday & the lowest since Aug 2 for a most-active contract. For the week, gold trades roughly 3.2% lower, which would mark its sharpest such decline since May 5, 2017. A surge in yields for gov paper poses a threat to bullion as investors tend to gravitate to assets perceived as safe investments that offer higher yields & precious metals don’t bear a coupon, analysts say. The 10-year Treasury note yield was at 1.9274% today, compared with 1.727% at the start of Nov.
Gold drops to a 3-month low as yields climb on signs of progress U.S.-China trade talks
Oil futures climbed to recoup most of their losses from a day earlier, after China & the Us agreed to lift existing tariffs if a partial trade deal is struck soon. The news offered a signal that trade talks are progressing & provided an upbeat backdrop for crude demand. West Texas Intermediate crude for Dec rose 80¢ (1.4%) to settle at $57.15 a barrel, recovering most of its 1.5% loss yesterday. Jan Brent crude picked up 55¢ (0.9%) to end at $62.29 a barrel, following a its 1.9% skid a day earlier. Gao Feng said Beijing & the US agreed to the simultaneous removal of import duties recently imposed as the parties move closer to a phase one trade pact. The report helped to bolster sentiment for assets considered risky, including stocks, particularly after reports yesterday signaled that a meeting between Pres Trump & Chinese Pres Xi Jinping would be delayed until next month. Trade clashes between Beijing & DC have been a focus for energy traders because the long-running dispute between the 2 global superpowers threatens to hurt appetite for crude & its byproducts by hurting economic growth. The dispute centered on import duties & intellectual-property rights has contributed to slowing global economic growth. The Energy Information Administration reported that US crude supplies rose a 2nd straight week, up 7.9M barrels last week.
Oil ends higher as U.S. and China agree to phase out some tariffs if a deal is reached
The market averages are at record highs. Optimism on trade talks is high, although stocks retreated in the PM & market breadth was not impressive. A further advance in stocks will need more positive news about US-China trade. The volatility index (VIX) was up a smidgen today, in the high12s, indicating investors are eager to buy risky investments (i.e. stocks) while popular stock averages are at records.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Chinese importers bought 136K metric tons of soybeans last week as trade talks between the US & China moved toward a phase one deal. Soybean futures traded at the Chicago Mercantile Exchange were up 0.3%, above $9.30 a bushel. Soybean purchases by China have been ramped up in recent weeks as the 2 sides have moved closer to a deal. China bought more than 1.5M metric tons in the final week of Sep & have continued to purchase the legume thru Oct. Earlier this year, China stopped buying soybeans as trade tensions ratcheted higher. The US & China are said to be putting the finishing touches on a partial trade deal, which they hope to sign later this month. Full details of an agreement haven't been disclosed yet, but Beijing is said to be making concessions on financial services & agriculture. The US agreed not to raise existing duties on $250B of Chinese goods from 25-30% on Oct 15. A decision has not been made on tariffs on $160B scheduled for Dec 15. "The agriculture chapter is virtually completed,” White House economic adviser Larry Kudlow said, adding that the financial services and currency stability parts were "virtually wrapped up." Kudlow added that talks involving the forced transfer of technology have seen "some progress," but will likely be completed during the 2nd part of an agreement. Pres Trump has said a comprehensive deal could be done in 2 or 3 parts. The timeline for a phase one agreement was thrown into question after the Asia-Pacific Economic Cooperation summit, which was scheduled for later this month & is where Trump & Chinese Pres Xi Jinping had hoped to sign the deal, was canceled due to unrest in the host country, Chile.
China buys 136,000 metric tons of soybeans
Consumer borrowing grew in Sep at the slowest rate in 15 months, according to Federal Reserve data. Total consumer credit increased $9.5B, down from $17.8B in Aug. The forecast called for a $15B gain. The Sep gain was well below the monthly average growth for the first 8 months of the year of around $16B which translates into an annual growth rate of 2.8%, the slowest since Jun 2018. Revolving credit, like credit cards, fell for the 2nd straight month in Sep. Borrowing fell 1.2% after falling 2.5% in Aug, the 3rd decline in revolving credit in the past 4 months. Nonrevolving credit, typically auto & student loans, rose 4.2% in Sep, the slowest rate in 4 months. The data does not include mortgage loans. With business investment sagging, all eyes are on the consumer to keep the expansion on track. Fed Chair Jerome Powell said last week that the Fed hasn't seen the weakness from business spending “getting into the consumer side of the economy." But many economists worry about increasing layoffs in coming months. For now, low unemployment & solid wage growth has consumers on a solid footing. Banks have been tightening standards on credit cards all year, according to the Fed's latest senior loan officer survey, despite delinquencies being near historic lows.
September consumer credit grows at slowest rate in 15 months
Gold futures dropped to post their lowest finish in 3 months & largest weekly percentage decline in more than a year. Renewed optimism about a near-term, partial US-China trade agreement stirred a rise in debt yields, dulling the appeal of precious metals. Today, China & the US agreed to lift some tariffs on one another in stages if the 2 countries reach a partial trade deal. “This is what [the two sides] agreed on following careful and constructive negotiations over the past two weeks,” said China Ministry spokesman Gao Feng, during a regularly scheduled news briefing. Dec gold declined $26.70 (1.8%) to settle at $1466 an ounce, more than wiping out its 0.6% gain from yesterday & the lowest since Aug 2 for a most-active contract. For the week, gold trades roughly 3.2% lower, which would mark its sharpest such decline since May 5, 2017. A surge in yields for gov paper poses a threat to bullion as investors tend to gravitate to assets perceived as safe investments that offer higher yields & precious metals don’t bear a coupon, analysts say. The 10-year Treasury note yield was at 1.9274% today, compared with 1.727% at the start of Nov.
Gold drops to a 3-month low as yields climb on signs of progress U.S.-China trade talks
Oil futures climbed to recoup most of their losses from a day earlier, after China & the Us agreed to lift existing tariffs if a partial trade deal is struck soon. The news offered a signal that trade talks are progressing & provided an upbeat backdrop for crude demand. West Texas Intermediate crude for Dec rose 80¢ (1.4%) to settle at $57.15 a barrel, recovering most of its 1.5% loss yesterday. Jan Brent crude picked up 55¢ (0.9%) to end at $62.29 a barrel, following a its 1.9% skid a day earlier. Gao Feng said Beijing & the US agreed to the simultaneous removal of import duties recently imposed as the parties move closer to a phase one trade pact. The report helped to bolster sentiment for assets considered risky, including stocks, particularly after reports yesterday signaled that a meeting between Pres Trump & Chinese Pres Xi Jinping would be delayed until next month. Trade clashes between Beijing & DC have been a focus for energy traders because the long-running dispute between the 2 global superpowers threatens to hurt appetite for crude & its byproducts by hurting economic growth. The dispute centered on import duties & intellectual-property rights has contributed to slowing global economic growth. The Energy Information Administration reported that US crude supplies rose a 2nd straight week, up 7.9M barrels last week.
Oil ends higher as U.S. and China agree to phase out some tariffs if a deal is reached
The market averages are at record highs. Optimism on trade talks is high, although stocks retreated in the PM & market breadth was not impressive. A further advance in stocks will need more positive news about US-China trade. The volatility index (VIX) was up a smidgen today, in the high12s, indicating investors are eager to buy risky investments (i.e. stocks) while popular stock averages are at records.
Dow Jones Industrials
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