Dow retreated 68, decliners over advancers about 2-1 & NAZ was off 87. The MLP index was off 1+ to the 178s & the REIT index went up 2+ to 480. Junk bond funds fluctuated & Treasuries continued in demand. Oil rose 1 to the 69s & gold fell 4 to 1793 (more below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Treasury Secretary Janet Yellen renewed her pressure on Congress to boost or suspend the nation's debt ceiling, warning the dept's efforts to temporarily finance the government could end as soon as Oct. "Based on our best and most recent information, the most likely outcome is that cash and extraordinary measures will be exhausted during the month of October," Yellen wrote in a letter to congressional leaders. Lawmakers missed a deadline at the end of Jul to extend former Pres Trump's 2-year suspension of the nation's borrowing limit, which was automatically reinstated at the beginning of Aug. 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. House Speaker Nancy Pelosi said that Congress has "several options" over the coming weeks to raise, or suspend, the debt ceiling before the gov runs out of money to pay its bills. But she rejected a push to tether the debt limit to the $3.5T tax & spending bill that Dems are planning to pass unilaterally, teeing up a partisan battle with GOP lawmakers this month. "We’d like to do it in a bipartisan way," Pelosi added. "We don’t ever want to put the full faith and credit [of the U.S.] in doubt.Senate Republicans 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." "I can't imagine there will be a single Republican voting to raise the debt ceiling after what we've been experiencing," Senate Minority Leader Mitch McConnell said recently. If the US failed to raise or suspend the debt limit, it would eventually have to temporarily default on some of its obligations, which could have serious & negative economic implications. Interest rates would likely spike & demand for Treasuries would drop; even the threat of default can cause borrowing costs to increase.
Yellen: Treasury may exhaust extraordinary debt limit measures in October
The Federal Reserve should move forward with a plan to trim its massive pandemic stimulus program despite a slowdown in job growth last month, St Louis Federal Reserve Bank Pres James Bullard said. Bullard dismissed concerns that the labor market recovery was faltering even as the US economy created the fewest job in 7 months in Aug after hiring in the leisure & hospitality sector stalled amid a resurgence in COVID-19 infections. "There is plenty of demand for workers and there are more job openings than there are unemployed workers," Bullard added. "If we can get the workers matched up and bring the pandemic under better control, it certainly looks like we'll have a very strong labor market going into next year," he continued. Bullard said in late Aug that he would like the central bank to start reducing its asset purchases soon & finish winding down those purchases by Q1 of next year. "The big picture is that the taper will get going this year and will end sometime by the first half of next year," he said.
Fed's Bullard says stimulus tapering should begin this year: report
The summer doldrums may have hit the housing market. Demand for mortgage applications fell 1.9% from a week ago, according to the Mortgage Banker's Association's survey. The Refinance Index decreased 3% percent & Purchase Index decreased 0.2%. "Mortgage application volume fell last week to its lowest level since mid-July, as mortgage rates have stayed just above 3% for several weeks," said Mike Fratantoni, MBA's senior VP & chief Economist. "Refinance volume has been moderating, while purchase volume continues to be lower than expected given the lack of homes on the market." The Aug nonfarm payrollreport showed the US economy added just 235K jobs, less than the 728K estimate. The unemployment rate fell to 5.2%. "Economic data has sent mixed signals, with slower job growth but a further drop in the unemployment rate in August. We expect that further improvements will lead to a tapering of Fed MBS purchases by the end of the year, which should put some upward pressure on mortgage rates," added Fratantoni. The interest rate on a 30-year fixed-rate mortgage remained unchanged at 3.03%. The survey covers over 75% of all US retail residential mortgage applications & has been conducted weekly since 1990.
Mortgage applications hit summer low
Gold futures remained below the key $1800 mark, their losses to a 2nd consecutive session, pressured by further strength in the $. Investors awaited trading cues from the release of the Federal Reserve's Beige Book on economic conditions later today. Dec gold fell by $8 (0.5%) to finish at $1789 an ounce after topping a high at $1804. Prices dropped 1.9% yesterday — the sharpest one-day percentage drop for a most-active contract since Aug. 9, with the move pushing the contract to the lowest settlement since Aug 26. The $ continued to strengthen yesterday, weighing on gold which is traded in the greenback. The ICE U.S. Dollar Index was up 0.2% at 92.72. Meanwhile, weakness in benchmark bond yields, which can compete for haven flows against the yellow metal, failed to provide much support for gold. The 10-year Treasury was yielding 1.36%, compared with around 1.37% yesterday. Trading for gold has come against the backdrop of concerns about the delta variant of the COVID-19, which have supported price moves & uncertainty about the Fed's monetary-policy plans, as the labor-market recovery looks uneven. The fact that easy-money policies have remained in place has helped equity markets rise repeatedly to record highs, undercutting demand for bullion, some strategist argue.
Gold holds below $1,800, suffers consecutive losses
After being prodded by Janet Yellen, those guys in DC woke up to recognize the need for raising the debt ceiling. As usual, moving forward goes slowly in DC - even for whopper size spending bills. The Dow is down 340 in the shortened week as stocks are struggling to find buyers with all the problems out there (starting with the delta slowing growth). The chart below shows it has been even for the last 2 months.
Dow Jones Industrials
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