Dow dropped 196, decliners over advancers 2-1 & NAZ pulled back 120. The MLP index fell 3+ to the 176s & the REIT index was off 1+ to the 465s. Junk bond funds drifted lower & Treasuries were sold bringing higher yields. Oil was off 1+ to the 71s after recent strength & gold fell 6 to 1750.
AMJ (Alerian MLP index tracking fund)
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Senate Minority Leader Mitch McConnell rejected a request by Treasury Secretary Janet Yellen for Reps to join Dems to raise or suspend the debt ceiling before the federal gov runs out of cash to pay bills in Oct. "The Leader repeated to Secretary Yellen what he has said publicly since July: This is a unified Democrat government, engaging in a partisan reckless tax and spending spree," McConnell's spokesperson said. "They will have to raise the debt ceiling on their own, and they have the tools to do it." For months, Yellen has been urging Congress to increase the gov's borrowing limit, warning the Treasury Dept will exhaust its so-called extraordinary measures in Oct. Yellen will "continue to talk to Republicans and Democrats about the critical need to swiftly address the debt ceiling in a bipartisan manner, to avoid the catastrophic economic consequences of default," a Treasury spokesperson said. The debt ceiling, which hit $22T in Aug 2019, is the legal limit on the total amount of debt that the federal gov can borrow on behalf of the public, according to the Committee for a Responsible Federal Budget (CRFB). Once the suspension lifted, the new limit was reinstated around $28.5T, a figure that includes debt held by the public & the gov. At the beginning of Aug, the Treasury Dept began deploying extraordinary measures to ensure the gov can continue to pay its obligations for the time being. But if the debt ceiling is not raised or suspended, the gov can no longer issue debt & will soon run out of cash on hand. But Senate Reps are resisting a move to raise the nation's borrowing limit, with 46 of them pledging to oppose any increase this fall with a vote that would require at least 10 GOP lawmakers to pass.
McConnell puts his foot down, rejects Yellen debt ceiling request
Growth across a range of Chinese economic indicators pulled back sharply in Aug, as a new outbreak of the Covid-19 Delta variant & tighter gov regulations on the property market hit consumer spending & the housing sector. Retail sales, a key gauge of China’s consumption, rose just 2.5% in Aug from a year earlier, down sharply from Jul's 8.5% year-over-year growth, according to data released by China's National Bureau of Statistics. The result marked the lowest pace of growth in a year missed by a large margin the 6.3% increase expected. Separate data by the statistics bureau showed home sales by value falling 19.7% in Aug from a year ago, the largest drop since Apr 2020—at the height of the pandemic. Average new-home prices in 70 major Chinese cities inched 0.16% higher in Aug from the previous month, the smallest such gain this year. Real-estate investment in the first 8 months of the year, meantime, increased 10.9% year over year, slowing from a 12.7% gain in the Jan-Jul period. Construction starts, as measured by floor area, dropped 3.2% in the Jan-Aug period, accelerating from a 0.9% year-over-year decline in the first 7 months of the year. China's property market has long been a key driver of the country's growth, while reorienting the economy toward domestic consumption has become a priority for policy makers concerned about an unhealthy tilt toward infrastructure- & export-led growth. The weakness in these 2 sectors is likely to add to concerns about the growth trajectory in the world's 2nd-largest economy & prompt questions about whether authorities will intervene to support growth. While policy makers remain comfortably on pace to hit their full-year growth domestic product target of at least 6%—H1 GDP growth was 12.7% year over year—further deterioration in these 2 sectors could change the calculus for leaders in Beijing. The weakness in retail spending, in particular, came as Chinese authorities struggled with a Delta variant outbreak that began in late Jul & quickly spread across the country, prompting the imposition of restrictions on people's movements.
China’s economy in trouble as COVID continues to plague country
The 10 year Treasury yield rose, following mixed economic data. The yield on the benchmark 10-year Treasury note advanced by 5 basis points to 1.382% & the yield on the 30-year Treasury bond rose 4 basis points to 1.922%. Yields move inversely to prices & 1 basis point is equal to 0.01%. Data released yesterday showed retail sales in Aug rose 0.7%, versus an estimated 0.8% fall. However, jobless claims for the week ended Sep 11 came in at 332K, above the forecast of 320K.
10-year Treasury yield rises slightly following mixed economic data
Many do not understand numbers & have difficult dealing with the debt ceiling limit. But it is HUGE. The guys in DC aren't worried & may not get excited until they are told there isn't enough money to pay them. Then they will get busy. Forgotten with all the chaos, those same guys have to fund the federal gov for the next 12 months, That is dead in the water. And then there's economic data. It's fairly good all considered, but still soggy. The stock market is only about even this month.
Dow Jones Industrials
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