Dow dropped 359, decliners over advancers more than 3-1 & NAZ pulled back 105. The MLP index was off 2+ to 191 & the REIT index fell 2+ to the 451s. Junk bond funds were mixed & Treasuries remained in heavy demand (more below). Oil climbed back to the 73s & gold slid back 2 to 1799 (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)
Committee for a Responsible Federal Budget President Maya MacGuineas said the US economic foundation is being "weakened" as massive spending plans continue to pour out of DC She argued that "it’s not normal to expand government programs by trillions of dollars." MAYA MACGUINEAS: The situation is really quite dire in that it is eating away at the health of the economy, but there's very little way that you see it on the surface. It's kind of the foundation that's being weakened. What happened is that during COVID, there was a reason to borrow a whole lot of money because, again, the economy was just slammed shut and we needed to fill in that gap and help families and fight the pandemic. Now that we are out of that, unfortunately, what's happened is that spending in the trillions has been normalized and it's not normal. I'm gravely concerned that when people are talking about pay for us, they're not real. And when you get down to the details, the things people will push back on both parties is not the massive increase in spending. It's the fact that we're trying to pay for it in some way. So we need to think about what ways to pay for these things make the most sense and how to scale back some of the policies and also focus on the need to get that debt under control. We are divided, we are divided on everything, so let's stop trying to do things that are more to the extremes and try to figure out where we might be able to get things done.
Washington’s massive spending plans are weakening US economic foundation, watchdog warns
The number of Americans out of work for at least a year jumped by 248K in Jun, underscoring persistent challenges for some households even as the broader labor market is improving. Nearly 2.9M people have been jobless for 52 weeks or more, according to the Bureau of Labor Statistics. The agency only reports these figures without an adjustment for seasonal factors. That represented about 29% of all unemployed workers last month. Such workers are among the long-term unemployed, or those experiencing a period of joblessness lasting 6 months or more. It's a risky financial time for affected households, which may experience income loss, greater difficulty finding a new job & a reduction in future earnings potential. The increase in yearlong unemployment comes as the US added 850K jobs in Jun, the most since last Aug. Layoffs, which began en masse in Mar & Apr 2020, were still about 20% higher than pre-pandemic levels over the following 2 months.
Number of workers unemployed for more than a year jumps by 248,000
Africa, where less than 2% of the population is vaccinated against Covid-19, experienced its worst surge of cases last week since the pandemic began, the World Health Organization (WHO) said. The 2nd-largest continent recorded more than 251K new Covid cases last week, a 20% increase from the prior week & a 12% increase from the Jan peak. Active cases in Africa recently surpassed 642K, eclipsing a 2nd-wave peak of 528K active cases in Jan, according to Johns Hopkins University data. “Africa has just marked the continent’s most dire pandemic week ever. But the worst is yet to come as the fast-moving third wave continues to gain speed and new ground,” said Dr Matshidiso Moeti, WHO's regional director for Africa. “The end to this precipitous rise is still weeks away. Cases are doubling now every 18 days, compared with every 21 days only a week ago.” More than 16 African countries, including Malawi & Senegal, are seeing new cases rise. The more transmissible delta variant has been detected in at least 10 of those countries. Uganda, the Democratic Republic of Congo, Namibia, Zambia, Rwanda & Tunisia are also experiencing some of the worst upticks in infections, Africa Centers for Disease Control & Prevention said. Hospitalizations have increased by more than 40% across the continent in recent weeks. South Africa is currently grappling with a devastating 3rd wave of infections after the delta variant forced the country back into lockdown last week. A curfew is currently in place in the country, while less than 1% of its residents are vaccinated against Covid. Across the continent, less than 2% of all people have been inoculated due to a slow intl vaccine rollout that has left poorer nations waiting for the lifesaving shots. The 50M doses administered to date in Africa make up just 1.6% of doses administered globally.
Africa suffers worst surge in Covid cases as delta variant spurs third wave of pandemic
The 10-year Treasury yield fell as low as 1.25%, its lowest point since Feb, continuing a sharp reversal in the bond market amid growing concern about the pace of the global economic recovery. The yield on the benchmark 10-year Treasury note was 2.8 basis points lower at 1.293% in late trading before climbing back slightly after reaching 1.25% earlier in the session. The yield on the 30-year Treasury bond dipped 2.4 basis points to 1.92%. Yields move inversely to prices & 1 basis point equals 0.01 percentage point. The weekly jobless claims report indicated a slowdown in job growth. First-time applicants for unemployment benefits unexpectedly jumped to 373K last week. The forecast was looking to see 350K initial claims. The increase in initial filings for unemployment insurance comes after Jun's jobs report on Fri showed the unemployment rate rose to 5.9%, higher than expected. The spread of the more transmissible variant of Covid-19 also fueled worries about a deceleration in global economic growth, sending investors into the safety of Treasuries. The yield decline in recent weeks represents a sharp reversal from a dramatic rise that started in late 2020. After entering Jan below 1%, the benchmark 10-year yield rose above 1.7% in Mar before retrenching near the 1.6% level for much of Apr. The move has mystified investors & some believe it's largely technical factors driving the decline in yields. Short term rates have not fallen at the same pace as long-term rates, causing a flattening of the Treasury yield curve. Investors expect the central bank's first move would be to slow its asset purchases while leaving its main rate at historic lows.
10-year Treasury yield falls to 1.25% amid concerns about
Gold futures finished slightly lower, marking the first decline in 6 sessions, as stocks, bond yields & the $ all headed lower, perhaps checking bullion's decline. A selloff in the equity market may have resulted in investors liquidating some of their winning holdings like gold, weighing on the precious metal’s price. Aug gold traded $1 lower to settle $1800 an ounce after gaining 0.4% yesterday. Gold hit an intraday peak at $1819 before pulling back. Gold had been bid higher after the release of minutes from the latest meeting of the US's rate-setting Federal Open Market Committee showed officials pondering the start of a reduction in asset purchases, potentially sooner than they had originally expected. Trading gold today seemed unswayed by US weekly data on those seeking unemployment benefits, which rose 2K to 373K in the week. New jobless claims from 2 weeks ago were raised to 371K from 364K.
Gold futures stage U-turn to log first decline in six sessions amid stock-market stumble
Oil futures ended higher, after gov data showed a large drop in US crude & gasoline inventories, but uncertainty about global supplies continued to limit upside amid a dispute between OPEC heavyweights over production plans. The Energy Information Administration said US crude inventories fell by 6.9M barrels last week, while gasoline inventories dropped by 6.1M barrels. The forecast called for crude stocks to fall by 6.2M barrels, while gasoline supplies were expected to drop by 1.7M barrels. West Texas Intermediate crude for Aug rose 74¢ (1%) to close at $72.94 a barrel after trading as low as $70.76. Sep Brent crude rose 69¢ (0.9%) finishing at $74.12 a barrel. The American Petroleum Institute yesterday said US inventories of crude oil fell by 7.98M barrels last week. A global equity market selloff & a continued rally in Treasuries, reflecting concern about economic growth, continued to limit upside in oil prices, amid worries about the spread of the delta variant of the coronavirus that causes COVID-19. And uncertainty lingers over the continued OPEC stalemate. Oil trading has been volatile after talks by OPEC & its allies (OPEC+) collapsed Mon derailing a proposal to ease existing output curbs in a controlled manner & allow production to rise by 400K barrels a day each month from Aug thru Dec. The UAE has blocked a deal, insisting that it should be allowed to raise the amount of crude it pumps under the initial agreement on production cuts. Meanwhile, oil may also be caught up in a global bout of investor aversion to risky assets. Stock indices globally fell today as investors took a step back from bets on an accelerating economic recovery & rising inflation. Analysts said concerns over the delta variant were also weighing on sentiment. Today Japan was set to place Tokyo under a state of emergency that would continue through the Olympics, underlining fears a COVID-19 surge will multiply during the Games.
Oil ends higher after big drop in U.S. crude, gasoline inventories
There is plenty of information out there for investors to digest. The biggest is the rally in Treasuries, bringing the lowest yields since Feb. That money is coming from selling stocks. Dow is where it was at the start of May & which may indicate that the longer term rally is very tired. This is a tough time for nervous investors.
Dow Jones Industrials
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