Dow fell 82, advancers over decliner about 5-4 & NAZ went up 115. The MLP index dropped 3+ to the 187s & the REIT index was off 1+ to the 482s. Junk bond funds hardly budged in price & Treasuries were heavily purchased. Oil crawled higher into the 82s & gold soared 34 to 1798.
AMJ (Alerian MLP index tracking fund)
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The number of Americans filing for unemployment benefits fell to a fresh pandemic-era low as workers continued to file into the labor force, the number of new infections caused by the COVID-19 delta variant waned & the expiration of supplemental benefits moved further in the rearview mirror. Data released by the Labor Dept showed initial jobless claims last week declined by 14K from 269K, making for the lowest reading since Mar 14, 2020. The previous week's reading was revised higher by 2K to 283K filings. Continuing claims, or the number of Americans who are consecutively receiving unemployment benefits, fell by a larger-than-expected 134K to a pandemic-era low of 2.1M. The forecast anticipated a decline to 2.118M. About 2.67M Americans were collecting jobless benefits, compared with an estimated 22M Americans one year prior.
Jobless claims slide to pandemic-era low
US service sector jobs grew to record highs in Oct despite lingering supply chain problems across the country. According to the Institute for Supply Management's (ISM) report, service industries – which include everything from retail to restaurants & bars to trucking companies & hotels – jumped to a Services PMI rating of 66.7% in Oct, a nearly 5% increase from Sep. The Services PMI is a composite index based on business activity, new orders, employment & supplier deliveries. According to ISM, a Services PMI above 49.2% indicates growth in the overall economy. Although business activity, new orders, supplier deliveries & a backlog of orders all surpassed previous records, sticky issues that have plagued almost every kind of economic activity since infections began to ease in the US continued: labor shortages, supply chain bottlenecks & higher prices. The reading for employment grew for the 4th straight month in Oct, but dipped slightly from Sep, creeping closer to contraction at 51.6%. Respondents – including purchasing & supply executives – said they are still having trouble filling positions. The US has been beset by steep price increases driven by high public spending & an ongoing global supply chain crisis tied to the COVID-19 pandemic. Employers across industries, meanwhile, have struggled to fill vacant jobs. The labor shortages, along with the difficulties in getting parts & products due to supply chain issues, led to a record reading of 67.3% in the backlog of orders category. Businesses have also had trouble stocking up on goods, with the inventories index declining for the 5th straight month, to 42.2%. The prices index rose 5.4 percentage points from Sep, registering 82.9% in Oct. That's the highest reading since 2005, when it hit an all-time high of 83.5%.
US service sector jobs hit record highs in October
Treasury yields were mixed, as investors continued to digest the Federal Reserve's announcement that it will begin to taper its bond purchases. The yield on the benchmark 10-year Treasury note fell by 1 basis point to 1.57% & the yield on the 30-year Treasury bond rose by 2 basis points at 2.01%. Yields move inversely to prices & 1 basis point is equal to 0.01%. The Fed announced yesterday that it will begin to pull back its $120B monthly bond-buying program “later this month.” The central bank is set to reduce its bond purchases by $15B per month, meaning its quantitative easing should end by the middle of 2022. Yields on short-dated US bonds had risen less than those in other markets on hawkish central bank talk, but said this was because the Federal Open Market Committee had indicated its first interest rate hike would require fuller employment.
10-year Treasury yield falls slightly following Fed taper announcement
Dow Jones Industrials
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