Mixed markets after US officials call for a pause in J&J vaccine

Dow was off 68, decliners barley ahead of advancers & NAZ shot up 146.  The MLP index was even in the 167s & the REIT index rose 2+ to the 413s.  Junk bond funds were in demand & Treasuries saw heavy buying.  Oil climbed above 60 & gold added 12 to 1745 (more on both below).

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The US budget deficit ballooned to a record $1.7T in the first ½ of the fiscal year as a 3rd round of stimulus checks included in Pres Biden's coronavirus relief package sent federal spending skyrocketing.  The deficit for the first ½ of the budget year, from Oct thru Mar, was up from $743B in the year-ago period, the Treasury Dept said.  In Mar, the gap between what the gov spent & what it collected hit $660, nearly 4 times what it was one year ago.  Revenue rose to $268B last month, while spending increased by 161% to $927B – the 3rd-highest total on record, after Jun & Apr of last year.  The figure comes on the heels of the $1.9T stimulus package passed by Congress in Mar, which sent a one-time payment of up to $1400 to most Americans, expanded unemployment benefits by $300 a month & temporarily expanded the child tax credit.  The stimulus payments in Mar totaled $339B.  Biden & congressional Dems are currently working to pass another massive economic spending proposal that could cost upwards of $2T & would make major investments in the nation's roads & bridges, as well as transit systems, schools & hospitals.  The 8-year proposal would be paid for by raising the corp tax rate to 28% from 21% – rolling back part of former Pres Trump's 2017 tax cuts – as well as increasing the global minimum tax on US corps to 21% from 13% & ending tax subsidiaries for fossil-fuel companies.  The budget deficit for fiscal 2020, which ended Sep 30, totaled a record $3.1T.  The Congressional Budget Office estimated in Feb that this year's shortfall will hit $2.3T, but that does not factor in the $1.9T American Rescue Plan, or the multitrillion-$ "Build Back Better" infrastructure proposal under consideration.

US deficit rises to record in six months, fueled by COVID relief spending

Boeing's (BA), a Dow stock, Mar aircraft sales outpaced cancellations for the 2nd month in a row as some airlines turn their attention to the industry'’s recovery from Covid-19's toll on travel.  The manufacturer reported gross orders of nearly 200 of its bestselling 737 Max aircraft, including a 100-plane sale to Southwest Airlines (LUV).  Accounting for cancellations, conversions & other order changes, it posted net positive orders of 40 planes.  BA's backlog stood at 4054 planes at the end of last month, up from 4041 at the end of Feb.  Deliveries in Mar totaled 29 aircraft, including 2 787 Dreamliners for United Airlines (UAL).  BA resumed handovers of the Dreamliners to customers late last month, a process that it paused last year after it detected production problems.  That's up from 22 deliveries in Mar & welcome news for the aerospace giant.  The bulk of an aircraft’s price is paid upon delivery & the company is still struggling from the pandemic's impact on jetliner demand & the 20-month grounding of its bestselling 737 Max plane.  Last week, airlines temporarily grounded more than 60 Max planes after BA flagged a manufacturing issue that could impact a backup power unit.  The stock rose 3.75.
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Boeing’s sales again outpace cancellations, jetliner deliveries pick up

Gold futures ended higher, with data showing US consumer prices in Mar rose for the 4th month in a row & the pace of inflation hit the highest level in 2½ years lifting the metal’s appeal as a hedge against inflation.  The consumer-price index (CPI) jumped 0.6% in Mar, spearheaded by the rising cost of oil.  The  forecast called a 0.5% increase in the CPI.  The 12-month rate of inflation rose to 2.6% in Mar from 1.7%.  Jun gold rose $14 (0.9%) to settle at $1747 an ounce, a day after the precious metal logged the lowest finish for a most-active contract since Apr 5.  The move for gold on the session thus far also comes as bond yields, which compete against gold for haven demand, moved lower after the inflation data.

Gold prices gain after higher-than-expected reading on U.S. inflation

Oil futures climbed, with US prices topping $60 a barrel, after a monthly report from OPEC forecasting a jump in economic activity and oil demand, aided by the US's $1.9T COVID aid package & the rollout of vaccines, helped buttress sentiment in crude markets.  A report on Chinese intl trade also provided further evidence that an economic rebound was taking hold in one of the biggest importers of crude.  However, concerns about a slowdown in the rollout of the COVID vaccine, including a call for an immediate pause in the rollout of the JNJ one-shot vaccine, has raised some concerns about how quickly the US economy will bounce back from the pandemic.  In  monthly report, OPEC said it expects the bulk of consumption of energy products to pick up in H2-2021, after fresh coronavirus outbreaks result in fitful economic recoveries in many parts of the world in the next few months.  “The year started with new waves of COVID-19 infections, necessitating renewed lockdown measures in many OECD economies. Therefore, the bulk of consumption growth is expected to take place in 2Q21 and 3Q21,” the report read.  OPEC increased its 2021 global oil demand forecast by 100K barrels a day from its previous expectations.  It expects global oil demand to climb by about 6M barrels per day to reach 96.5M barrels per day this year.  OPEC also raised its forecast for global economic growth to 5.4% from 5.1%.  The “upward revision mainly takes into account a stronger economic rebound than assumed last month…supported by stimulus programs and a further relaxation in COVID-19 measures, amid an accelerated vaccination rollout,” the report added.  Geopolitical tensions also were helping support crude values.  Oil futures finished higher yesterday, as reports that Yemen's Iran-backed Houthi rebels attacked a Saudi oil facility lifted tensions in the oil-rich Middle East.

U.S. oil prices top $60 a barrel on hints of an uptick in demand

Mixed signals for investors to digest.  The pause on JNJ vaccine puts a damper on the economic recovery.  However the popular stock averages are close to their records & oil went back over 60.  The bulls are feeling pretty good even with an uncertain future for the next spending bill from Congress.  But negative thinkers bought gold & Treasuries.

Dow Jones Industrials