Dow gained 179, advancers over decliners 3-2 & NAZ jumped 199. The MLP index went up to the 196s & the REIT index was off 1+ to 447. Junk bond funds were bid higher & Treasuries continued in demand. Oil climbed in the 69s & gold advanced 20 to 1893 (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)
May's job gains were “solid” but not enough to change the direction of monetary policy, Cleveland Fed Pres Loretta Mester said. “Bottom line, I would like to see further progress than where we are right now,” Mester added. The Labor Dept reported a gain of 559K nonfarm payroll jobs during the month, a significant increase during normal times but still below the 671K estimate for an economy expected to be accelerating out of the pandemic crisis. Despite the gains, Mester said the payroll increase does not meet the “substantial further progress” benchmark the Fed has set before it will start to normalize policy from the Covid-19 era extreme accommodation. “I view it as a solid report,” she said. “I view it as progress continues to be made on the labor front, which is very good news. But I’d like to see further progress.” In its efforts to sustain the economic boom, the Fed is keeping benchmark short-term borrowing rates anchored near zero & is buying at least $120B of bonds each month. That has come even with the recovery of the nearly 15M jobs lost during the pandemic & an unemployment rate that has fallen to 5.8%. Still, central bankers say they want to keep pushing until the economy gets close to where it was pre-pandemic, when the unemployment rate was 3.5% & there were 7M more people working than there are now. “We want to be very deliberately patient here, because this was a huge, huge shock to the economy,” Mester continued. “We see now we’re coming back, but again it’s easy to shut down an economy, it’s much harder to have it come back.” “We’re looking for and basing our policy decisions on outcomes, how close are we to getting back to our dual mandate goals, what is the economic data telling us. Rather than just having a forecast, we want to see it in the data,” she added. She remains largely unbothered by the recent inflationary pressures that have pushed the Fed's preferred gauge up to a 3.1% year-over-year gain, well above the central bank’s 2% target.
Fed’s Mester lauds jobs report but says it’s not enough to change policy
Hiring improved in May, but 55(K new jobs aren't enough to spur the Federal Reserve to begin to talk about tapering back its bond purchases. The Labor Dept's report on new payrolls was below the 671K expected but also was not weak enough to cast serious doubts on the economic recovery though it does reveal the underlying issues of a worker shortage & jobs mismatch. The moderately strong data helped push stocks slightly higher & Treasury yields flip flopped before edging lower. The benchmark 10-year yield fell to 1.58%. Yields moves opposite price. Hotter-than-expected inflation data like Apr's consumer price index has helped feed speculation that the Fed could begin talking about tapering its bond purchases. Some strategists expect that the central bank may be ready to talk about trimming bond purchases by the time it meets for the Fed's Jackson Hole Economic Symposium in late Aug, but other market pros said a very strong jobs report could have put the issue on the table when the Fed meets Jun 15-16. The Fed's intention is to first discuss paring its $120M a month bond buying months before taking action. It would then spend many more months whittling back the size of its purchases. At the end of that period, the Fed may be on track to consider raising interest rates, which is not expected by the market until 2023. In the May report, the unemployment rate fell to 5.8% from 6.1% as the participation rate fell slightly to 61.6%. Apr jobs growth was revised higher to 278K from 266K but was still about a qtr of what had been expected for that month.
Jobs data improves, but not enough to get Fed talking about tapering
Gold futures ended higher after the Labor Dept reported that the US created 559K new jobs in May, missing estimates & suggesting the Federal Reserve may maintain its easy-money policies for longer. Gold for Aug climbed $18 (1%) to settle at $1892 an ounce, after losing 1.9% yesterday to end at its lowest since May 18. Prices based on the most-active contracts logged a loss of 0.7% for the week. The labor market data suggest that the economy faces a bumpy recovery from the COVID pandemic, which may give the Federal Reserve pause when considering removing easy-money policies & normalizing benchmark interest rates, which currently stand at 0% -0.25%. That is an environment in which gold may continue to climb. Fed members have said that jobs are a point of focus in determining whether the economy needs further support in the recovery from COVID. Meanwhile, the headwinds for bullion produced yesterday were blamed on the better-than-expected ADP report showed 978K new private sector jobs were created in May. That was well above the rise of 680K forecast. The $ strengthened yesterday following the ADP data, but moved down today, as measured by the ICE US Doll which was off 0.4%. The 10-year Treasury note yield was down at around 1.56%. Lower bond yields & a weakening $ can make commodities priced in the US currency, like gold, more attractive to buyers.
Gold futures end higher, pare weekly loss after U.S. employment data misses estimates
Oil futures finished higher on Friday as optimistic expectations for crude demand lifted US prices up by 5% for the week. The Organization of the Petroleum Exporting Countries & its allies (OPEC+) & the Intl Energy Agency (IEA) are looking for oil demand to recover further. The IEA, which now sees demand back at pre-crisis levels in a year, had previously not expected that to happen until 2023. OPEC+ agreed earlier this week to proceed with a timetable that will see it continue to ease output curbs thru Jul. Meanwhile, talks between Iran & world powers on reviving the 2015 Iran nuclear deal, which could lead the US to lift sanctions on Tehran, allowing it to contribute more oil to world supplies, have dragged on. A State Dept spokesman said the US expects to have a 6th round of indirect talks on reviving the deal. In the US, data from the Energy Information Administration yesterday revealed a 5.1M-barrel decline in domestic crude inventories for last week, but supplies of gasoline & distillates climbed. West Texas Intermediate (WTI) crude for Jul delivery rose 81¢ (1.2%) to settle at $69.62 a barrel. Aug Brent crude, the global benchmark, added 58¢ (0.8%) at $71.89 a barrel after trading as high as $72.17. WTI crude scored a 5% weekly rise, marking the highest front-month contract finish since Oct 2018, while Brent rose 4.6% to the highest finish since May 2019
Oil prices trade near 2-year high, but ‘jury is still out’ on demand recovery
Dow Jones Industrials
No comments:
Post a Comment