Dow climbed 45 (well below early highs), advancers over decliners 5-2 & NAZ lost 12. The MLP index gained 5 to the 191s & the REIT index jumped 7+ to 443 for a new record. Junk bond funds fluctuated & Treasuries were sold on expectations of higher interest rates. Oil jumped 1+ to 68 (a more than 2 year high) & gold slid 2 to 1902 (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)
More than 50% of the US population has received at least one Covid vaccine shot, federal data shows, as nationwide case counts continue to fall. Moderna (MRNA) applied for full Food & Drug Administration approval of its Covid-19 vaccine. Surveys have shown that FDA approval could inspire more people to get the vaccine, which is currently on the US market under an emergency use authorization. The 7-day average of daily new infections fell below 20K yesterday, according to data compiled by Johns Hopkins University, though many states did not report data due to the Memorial Day holiday. Centers for Disease Control & Prevention data shows that 50.5% of Americans have received at least one dose & about 41% are fully vaccinated. Among those 18 & older, roughly 63% have received one dose or more. 25 states & territories did not publish Covid data yesterday due to the holiday, bringing the 7-day average of daily infections to below 20K for the first time since the early days of the pandemic. Cases may tick upward in the coming days as states report backlogged data from the holiday. The latest 7-day average of vaccines administered, which is also impacted by the lack of holiday weekend data, sits at 1.3M shots administered.
Half of Americans have at least one vaccine shot as U.S. cases fall further
Gold prices rose yesterday & were headed for their best monthly jump since Jul 2020, boosted by a weaker $ & lower bond yields, while growing inflationary pressure also lifted demand for the safe-haven metal as a hedge. Spot gold was up 0.2% at $1906 per ounce, while US gold futures gained 0.3% to $1913. Bullion has risen nearly 8% so far this month. The $ index eased 0.1% against its rivals, while the 10-year Treasury yield fell to 1.593% on Fri, reducing the opportunity cost of holding non-interest bearing gold. Gold, often used as a hedge against inflation, has benefited from recent data showing a rise in prices in the US & the UK.
Gold eyes best month since July 2020 on softer dollar, inflation woes
Gold futures ended lower, but held ground above the key $1900 mark, as Treasury yields edged up following upbeat US manufacturing data. Prices for the metal pared early gains after data showed that the IHS Markit US manufacturing index in May was at 62.1, versus an initial 61.5. Prices then moved lower after separate data on the US ISM manufacturing survey revealed a rise to 61.2% in May from 60.7%. Against that backdrop, the Treasury yields rose, with the 10-year Treasury note yield above 1.61%. Rising bond yields can dull the luster of gold, which offers no yield. Gold prices on Fri, the last trading day before the Mon holiday, had settled at their highest in about 5 months. Gold for Aug inched down chump change to settle at $1905 an ounce. Prices for the yellow metal scored a gain of nearly 8% in May. The Federal Reserve remains in focus as policy makers weigh when to begin considering a reduction in its monthly pace of bond purchases in the wake of rising inflation. The US personal consumption expenditure inflation index climbed to 3.6% in Apr from a year earlier, marking the strongest reading since 2008 & putting inflation well above the Fed’s 2% goal.
Gold prices end with a modest loss, hold above the $1,900 mark
The recent surge in US inflation is likely to evaporate once the
economy is fully recovered & business returns to normal, a senior
member of the Federal Reserve said. Fed Gov. Lael Brainard acknowledged inflation has risen “somewhat
higher” than she expected & that she is watching very closely for
signs that it's evolving in “unwelcome ways.” Yet she also reiterated her previous view that the increase in
inflation won't last, giving the Fed the flexibility to keep interest
rates low & maintain other measures to boost the economy. The
Fed adopted took a series of unprecedented steps immediately after the
coronavirus pandemic erupted to support the economy. Brainard & a
majority of the Fed's policymaking board say it's too early to withdraw
some of that support even in the face of rising inflation. The
chief sources of rising prices are what Brainard called temporary
shortages of key supplies & labor tied to the reopening of the
economy. “Many businesses shrank in order to survive the pandemic and now may be
struggling or moving cautiously to expand capacity,” she said. “These mismatches are exacerbated in some sectors by idiosyncratic
supply disruptions, such as in semiconductors, steel, and lumber.” A surprising labor shortage, meanwhile, is likely the result of
lingering fears of the coronavirus as well Brainard
expressed doubt that generous unemployment benefits are a big source of
the labor market shortage. She noted that most of the jobs the economy
added in Apr were in lower-paying occupations. She said a
combination of factors are keeping people out of the labor force, but
expects more people to look for work in the coming months as the
pandemic fades. Eventually, Brainard believes the low era of inflation that prevailed before the pandemic will return.
Crude oil futures rallied, with US & global benchmark prices marking their highest settlements in more than 2 years, after OPEC & their allies (OPEC+) kept their current plan to gradually increase oil production thru Jul in place. OPEC+ “reaffirmed the existing commitment” to “gradually return 2 million barrels a day…of the adjustments to the market.” The pace of that return of production will be “determined according to market conditions,” OPEC+ said in a press release issued just after the short meeting concluded. At a meeting on Apr 1, the group of producers said it would raise daily oil production by 350K barrels in May, 350K barrels in Jun & by 441K barrels in Jul. At the time, Saudi Arabia also said it would roll back its voluntary output cut by 250K barrels a day in May, 350K barrels a day in Jun & by 400K barrels a day in Jul. OPEC+ “emphasized the need to continue to consult and closely monitor market fundamentals” & maintain the monthly OPEC+ meetings until the end of the original Apr 2020 agreement, which is valid until Apr, 2022. West Texas Intermediate crude for Jul climbed $1.40 (2.1%) to settle at $67.72 a barrel on the New York Mercantile Exchange. Based on the front-month contracts, prices saw their highest settlement since Oct 2018. Aug Brent rose 93¢ (1.3%) to $70.25 a barrel, paring some the earlier gains that lifted prices to as high as $71.34. Prices logged the highest front-month finish since May 2019. Prices were trading sharply higher even before today's OPEC+ decision. OPEC’s technical committee yesterday confirmed forecasts for a rebound of 6M barrels a day in world oil demand this year. Oil investors are optimistic that demand is improving as economies recover from the coronavirus pandemic & a dwindling supply glut may mean the market can absorb additional supply.
Oil prices settle at highest in over 2 years as OPEC+ keeps its output plan in place
Dow Jones Industrials
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