Dow dropped 132 (above early levels), decliners over advancers better than 2-1 & NAZ fell 76. The MLP index was little changed in the 213s & the REIT index fell 4 to the 445s. Junk bond funds fluctuated & Treasuries were sold bringing higher yields (more below). Oil rose 2+ to go over 110 & gold went up 9 to 1885.
AMJ (Alerian MLP index tracking fund)
The US economy saw solid job growth in Apr, suggesting the labor market is still strong despite headwinds from rising interest rates, soaring inflation, a worsening labor shortage & fears of a slowdown. Employers added 428K jobs in Apr, the Labor Dept said in its monthly payroll report, beating the 391K jobs forecast . It marked the 12th consecutive month that job gains topped 400K. The unemployment rate, meanwhile, held steady at 3.6%, the lowest level since Feb 2020. Job gains were broad-based, with the biggest increases in the pandemic-battered leisure & hospitality industry (78K), manufacturing (55K), & transportation & warehousing (52K). The labor force participation rate, a key measure of the active workforce, fell 0.2 percentage points to 62.2%, matching the lowest level recorded this year as the labor force shrank by 363K workers. Businesses are eager to onboard new employees & are raising wages in order to attract workers as they confront a labor shortage. There were roughly 11.5M open jobs at the end of Mar – the highest on record – while the number of Americans quitting their job has also climbed to a new high. Ms of workers are seeing the largest pay gains in years, as companies compete with one another for a limited number of employees. Earnings rose 5.5% in Apr from the previous year, nearly double the pre-pandemic average of 3%. There are signs that growth could be moderating, with earnings climbing just 0.3% on a monthly basis, slower than expected.
US economy sees healthy job growth in April as payrolls jump
Treasury yields rose as traders digested a volatile week in markets. The yield on the benchmark 10-year Treasury note rose 1 basis point to 3.08%. It topped 3.12% at one point, its highest level since 2018 & the yield on the 30-year Treasury bond rose 2 basis points to 3.18%. Yields move inversely to prices & 1 basis point is equal to 0.01%. This came a day after the Fed announced a 50-basis-point interest rate hike. Yields dipped initially following the decision Wed, with stock markets seeing a relief rally, after Fed Chair Jerome Powell said a more aggressive 75-basis-point hike was not on the cards. However, stock markets sold off sharply yesterday, with the Dow plunging more than 1000 points. Investors were also heavily selling out of Treasuries, seeing yields jump. The sell-off in both markets indicated that on reflection of Wed's interest rate decision, investors remained concerned that a slowdown in economic growth could be a consequence of the Fed's hawkish tightening of monetary policy. In addition, weaker labor market data released on yesterday is also likely to have added to concerns. A labor productivity reading for the first qtr showed worker output had fallen at the fastest pace since 1947, while weekly unemployment insurance claims also came in slightly higher than expected. However, Apr's nonfarm payrolls grew by 428K for Apr, coming in ahead of estimates of 400K. The unemployment rate was expected to fall to 3.5% but stood at 3.6%.
The European Central Bank (ECB) should move quickly to raise interest rates in order to tackle soaring inflation, according to Finland's central bank chief. His comments come as the Federal Reserve & the Bank of England's tightening cycle intensifies pressure on the ECB to follow suit. “We have a conflict in pressures in monetary policy,” Olli Rehn, governor of the Bank of Finland & member of the Governing Council of the ECB said. “We are almost in between a rock and a hard place so that on one hand we have to ensure that the recovery will continue. On the other hand, we have to prevent higher inflation expectations being entrenched and being reflected in the labor market,” Rehn added. “In other words, we have to avoid second-round effects. Therefore, in my view, we should move relatively quickly to zero and continue our gradual process of normalization of monetary policy as we have done,” he continued. “Of course, all this on the condition that Russia’s war in Ukraine will not substantially escalate and intensify which could derail all the forecasts and the economic recovery.” Like many central banks around the world, the ECB is seeking to steer the euro zone economy thru an inflation surge that has been exacerbated by Russia's unprovoked onslaught in Ukraine.
ECB member pushes for quick move to raise rates, says Russia-Ukraine war could derail recovery
The Dow was down 500 in early trading, but the bulls trimmed those losses. There is also buying in safe haven gold Investors have a lot to digest. The economy is doing fairly well but the prospect of higher interest rates & high inflation have investors worried.
Dow Jones Industrials
No comments:
Post a Comment