Dow dropped 85 with selling in the last hour, decliners over advancers about 3-2 & NAZ was off 64. The MLP index was fractionally lower in the 131s & the REIT index gave back 5+ to the 352s. Junk bond funds did little & Treasuries hardly budged. Oil was about even in the high 42s & gold plunged 61 to 1951 (more on both below).
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The FOMC expressed concern at their last
meeting over the future of the economy, saying that the coronavirus
likely would continue to stunt growth & potentially pose dangers to
the financial system. At the Jul 28-29 session, the policymaking arm voted to keep short-term interest rates
anchored near zero, citing an economy that was falling short of its
pre-pandemic levels. Officials
at the meeting “agreed that the ongoing public health crisis would
weigh heavily on economic activity, employment, and inflation in the
near term and was posing considerable risks to the economic outlook over
the medium term,” the summary stated. Comments further
indicated that while members are in favor of adding clarity to their
expectations for when they will hike rates again, they appeared to
reject the likelihood of using bond purchases to control yields on
gov bonds. Because
of how much impact the virus will have on the economy, FOMC members
said they expect to hold the current overnight borrowing rate to 0%-0.25% until they're “confident that the economy had weathered
recent events and was on track to achieve the Committee’s maximum
employment and price stability goals.” GDP
tumbled at a rate of 32.9% in Q2 as the pandemic shut
down most nonessential activities. A return to growth is expected in Q3, though a resurgence in the virus is casting some doubt
on how aggressive the bouneback might be. Along with concerns about general growth, members said they worried about risks to the financial system. Though
Chair Jerome Powell & other Fed officials repeatedly have said
banks & related institutions are in generally strong shape, committee
members at the meeting said they worried whether that might change if
the virus spread persists and “more adverse” scenarios about the future
take hold. Officials also expressed concern about burgeoning levels of public debt. The
federal gov is now $26.6T in debt, a gain of more than
$3T during the pandemic as Congress & the White House rushed
to get aid to those impacted by the economic shutdown. That has
coincided with a rush to market of Treasuries & is raising concerns
that the high level of issuance “could have implications for market
functioning.” In addition to looking for the reasons behind the
policy decisions investors were focused on any clues about enhanced
“forward guidance,” or the parameters for future rate action, & the
possibility of using bond purchases to control gov bond yields. On the issue of yield caps, officials continued to voice skepticism about its usefulness. “Of
those participants who discussed this option, most judged that yield
caps and targets would likely provide only modest benefits in the
current environment, as the Committee’s forward guidance regarding the
path of the federal funds rate already appeared highly credible and
longer-term interest rates were already low,” the minutes said. Forward guidance, though, could be upgraded at some point. Members
indicated that “providing greater clarity regarding the likely path of
the target range for the federal funds rate would be appropriate at some
point.”
Fed officials expect that coronavirus will ‘weigh heavily’ on the economy, minutes show
As schools consider whether it’s safe to reopen
this fall, medical experts warn it could take years before students &
teachers can return to in-person education safely without masks, social
distancing & other measures intended to curb the spread of the
coronavirus. Whether & how to reopen schools in the US this fall has become a hotbed issue in recent weeks, with Pres Trump; &
Reps pushing for in-school learning as soon as possible, even as
the coronavirus continues to rapidly spread across the nation. The US
has the worst outbreak in the world with more than 5.4M cases & 172K deaths as of yesterday, according to Johns Hopkins University. Yesterday, the University of North Carolina at Chapel Hill announced it was canceling in-person undergraduate classes & shifting them to remote learning after a coronavirus outbreak
quickly spread across campus, demonstrating how difficult it may be to
return to in-person learning anytime soon. The University of Notre Dame
is also shifting to online classes after reporting a rise in infections. Experts say it may take a couple of years before students can resume classes without the risk of an outbreak, especially
among grade-school children. They say a combination of herd immunity, a
coronavirus vaccine & hygienic practices are needed to bring the
virus down to low enough levels & allow schools to safely return to
normal.
Scientists say it may be years before students can return to school without masks, social distancing
The head of Germany's vaccines regulator said some groups of people living in Germany could be vaccinated early next year against the coronavirus that has killed almost 800K worldwide & wreaked havoc on the global economy. More than ½ a dozen drugmakers around the world are conducting advanced clinical trials, each with tens of thousands of participants, & several expect to know if their COVID-19 vaccines work & are safe by the end of this year. Klaus Cichutek, head of the Paul Ehrlich Institut, said that data from Phase I & Phase II trials showed some vaccines triggered an immune response against the coronavirus. “If data from Phase III trials shows the vaccines are effective and safe, the first vaccines could be approved at the beginning of the year, possibly with conditions attached,” he said. “Based on assurances from manufacturers, the first doses for people in Germany will be available at that time, in accordance with the priorities set by the Standing Committee on Vaccination,” Cichutek said, referring to the group that makes recommendations for the use of licensed vaccines in Germany. Infections in Germany have risen in recent weeks & data from the Robert Koch Institute (RKI) for infectious diseases today showed the number of confirmed coronavirus cases climbing by 1510 to 227K. The RKI said 39% of cases were probably imported, with Kosovo, Turkey & Croatia most often reported as the likely source of infection in recent weeks.
German institute says coronavirus vaccinations could start in early 2021
The daily US death toll from the coronavirus that causes COVID-19 more
than doubled on yesterday to 1349, up from 542 deaths on
Mon,
as new cases increased to 43K from 40K the day before. As of
this morning, the overall US case tally rose to 5.5M &
the death toll grew to 172K, the number recovered was 190M, according to Johns Hopkins University data. Outside of the US, Brazil is 2nd in both cases & deaths with 3.4M cases & 110K deaths. India is 3rd in cases with 2.8M & Mexico is 3rd in deaths at 58K.
Daily U.S. death toll more than doubled to over 1,300, new cases topped 43,000
Gold prices settled sharply lower, ending a 2-day string
of gains, as the $ halted its skid & as commodity investors
watched for minutes from the Federal Reserve's Jul policy meeting,
which could provide further insights on the central banker's outlook for
the US & global business. Market participants will also watch for any announcements on
new measures the central bank may employ to alleviate economic harm
caused by the pandemic. US lawmakers were also
trying to reignite stalled talks that could see a smaller coronavirus
relief package released. Fed policy makers have persistently warned of
limits to their ability to prop up the economy & financial markets and
have encouraged Congress to provide more fiscal stimulus to extend the
recovery from COVID-19. Gold has mostly prospered in an environment of easy-money policies and uncertainty generated by the global viral outbreak. Dec gold was off $42 (2.1%) to settle at $1970 an ounce, following
a 0.7% gain for the precious metal in the previous session.
Oil futures trimmed losses after gov data showed a
smaller-than-expected drop in crude inventories but a reassuring decline
in gasoline supplies. Traders were also keeping an eye on a meeting of an OPEC+ panel
that was expected to recommend sticking with the current schedule of
production curbs as major producers gauge the COVID-19 pandemic's affect
on the demand outlook. West Texas Intermediate (WTI) crude for Sep was down 37¢ (0.9%) at $42.52 a barrel, while Oct WTI,
the most actively traded contract, was 42¢ lower with a fall of 0.9%, at $42.72. Oct Brent crude fell 45¢ (1%) to $45.01 a barrel. The Energy Information Administration (EIA) said crude inventories
last week fell by 1.6M barrels, while gasoline inventories were
down 3.3M barrels. Oil had been under pressure after the American
Petroleum Institute yesterday reported a rise in gasoline
inventories, which would be a bearish sign in the final stretch of
summer driving season. The EIA said distillate inventories rose by
200K barrels. The forecast called for EIA data to show US crude supplies fell 3.8M barrels
last week, while gasoline stocks were expected to show a decline of 2M barrels. Distillate supplies are forecast to fall 900K
barrels. The OPEC+ Joint Ministerial Monitoring Committee, meeting
virtually today, is largely expected to take a wait-&-see approach
after members in Aug went ahead with a plan to scale back output
cuts from 9.7M barrels a day to 7.7M barrels a day, albeit
with some producers who had failed to abide by earlier restrictions
agreeing to maintain deeper cuts.
U.S. oil benchmark erases loss, finishes flat after EIA reports drop in gasoline inventories
The Dow had been up all day. Then the sellers returned in the last hour & took the averages into the red. The stimulus bill in DC is going nowhere right now & coronavirus keeps up its fight. Also, traders were not encouraged by the Fed's assessment of the economy going forward. For 8 days, the Dow has pretty much been going sideways.
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