Dow fell 130, decliners over advancers better than 3-2 & NAZ crawled up 18. The MLP index dipped 1 to the 177s & the REIT index was even in the 461s. Junk bond funds were little changed & the REIT index saw a little selling (more below). Oil slid back pennies & gold was off 4 to 1749.
AMJ (Alerian MLP index tracking fund)
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Producer prices accelerated at the fastest annual pace on record in Jul as supply chain disruptions & materials shortages continued to put upward pressure on costs. The producer price index for final demand increased at a 7.8% pace for the 12 months ended Jul, according to the Labor Dept. The Jul print was faster than the 7.3% pace recorded in Jun & ahead of the 7.3% rate that was expected. The reading was the strongest since recordkeeping began in 2010. Producer prices rose 1% in Jul, matching the increase from Jun. The forecast called for prices to grow at a 0.6% pace. Nearly ¾ of the increase was due to the 1.1% rise in prices for final demand services, the largest on record. Almost ½ of the increase was due to a 1.7% rise in margins for final demand trade services, which measure changes in margins received by wholesalers & retailers. Approximately 20% of the increase can be attributed to margins for automobiles & automobile parts retailing, which jumped 11.2%. Airline passenger services & hospital outpatient care were among the other indices that saw gains. Portfolio management saw a 1.8% decline. Indices for chemicals & allied products wholesaling & for fuels & lubricants retailing also turned lower. Prices for final demand goods, meanwhile, rose 0.6%. Prices for tobacco products saw a notable 2.7% increase while prices for beef & veal fell 11.6%. Core producer prices, which exclude food & energy, rose 1% in Jul, double the 0.5% gain that was expected. Core prices climbed 6.2% annually, compared to the 5.6% increase that was forecast. The year-over-year increase was the largest since the data series began in 2014. The annual data has a "base effects" skew as a result of the price decline that occurred at the beginning of the pandemic. The Federal Reserve has said the recent price increases are "transitory" & that cost pressures will subside as supply chain issues caused by the pandemic are resolved.
Producer prices soar 7.8% annually in July, most on record
Initial jobless claims declined for the 3rd consecutive week as the US labor market continued its recovery from last year's recession. New claims for jobless benefits totaled 375K last week, the Labor Dept said, matching estimates. The reading for the previous week was revised upward by 2K to 387K claims. Jobless claims numbers have come down sharply since the spring as the economy has recovered & have settled near the 400K level in recent weeks. The 4-week average is now 396K initial claims. The latest jobless claims report, which reflects the first week of Aug, came a week after the Jul jobs report showed a bigger-than-expects gain in employment. There were also a record high number of open jobs at the end of Jul. Eligibility of unemployment benefits & the payouts, were expanded during the pandemic as businesses were forced to close due to public health restrictions. Some states have already ended the expanded programs, while the national program is set to expire next month. The number of insured unemployment claims, a measure of continuing jobless claims, fell to 2.9M for the last week of Jul, the lowest level since mid-Mar 2020. A broader measure of continued unemployment, which includes pandemic-specific benefits & other programs, also declined week over week. The state of the labor recovery has been a key metric for investors, as Federal Reserve officials decided to let inflation run hotter than normal in an effort to bring back jobs lost during last year's shutdowns.
U.S. jobless claims total 375,000, falling for a third straight week
Treasury yields were flat after initial jobless claims fell from the week prior for the 3rd-straight week. The yield on the benchmark 10-year Treasury note were unchanged at 1.359% & the yield on the 30-year Treasury bond were flat at 2.006%. Yields move inversely to prices. The Federal Reserve is keeping an eye on the recovery in the labor market to gauge when it should start winding down its ultra-easy policy. The number of initial jobless claims filed last week totaled 375K, in line with estimates. Continuing jobless claims numbered 2.9M last week, lower than the previous week & reaching a new pandemic-era low. Jul's producer price index came in hotter than expected. The index tracks the changes in prices companies get for the goods they produce & acts as a more indirect measure of inflation. Wholesale prices jumped 1%, higher than estimates & matching Jun's increase. Yesterday, the Jul consumer price index, which tracks the growth in prices that people pay for goods & services, showed that core inflation had risen 4.3% over the last year, a slight slowdown in price growth from Jun's 4.5%. Treasury yields fell following the release of the core CPI data, suggesting the numbers eased concerns that inflationary pressures could persist & prompt the Federal Reserve to tighten monetary policy sooner than expected.
US .10-year Treasury yield rises after jobless claims fall from prior week
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