Dow was off 62, advancers over decliners 4-3 & NAZ declined 101. The MLP index gained 3+ to the 192s & the REIT index was little changed in the 415s. Junk bond funds continued mixed & Treasuries saw heavy selling, raising yields. Oil went up 1+ to the 109s & gold declined 4 to 1825 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Orders placed with US factories for durable goods rose more than expected in May, suggesting business investment so far remains firm even in the face of rising interest rates & mounting concerns about the economy. Bookings for durable goods, items meant to last at least three years, increased 0.7% in May after a revised 0.4% advance a month earlier, Commerce Dept figures showed. The figures aren't adjusted for inflation. The value of core capital goods orders, a proxy for investment in equipment that excludes aircraft & military hardware, rose 0.5% after a 0.3% gain a month earlier. The estimate called for a 0.1% increase in orders for all durable goods & a 0.2% gain in the core figure. The broad pickup in orders suggests capital investment was firm in May even as more recent manufacturing data have started to show signs of softening. Several regional Fed measures of economic activity deteriorated or outright contracted in Jun, including in New York state & the Philadelphia area. S&P Global's manufacturing output index also sunk into contraction territory, stymied by high prices, weaker demand & materials shortages. So did new orders. The economic outlook has dimmed, with some businesses growing cautious in the wake of aggressive policy action by the Federal Reserve & heightened recession odds. Meantime, Americans are pulling back on merchandise spending.
US Durable Goods Orders Exceed Forecast
The Group of Seven economic powers are planning a continued commitment to supporting Ukraine, with the US preparing to purchase an advanced surface-to-air missile system for the country. The leaders are set to agree to pursue a price cap on Russian oil, raise tariffs on Russian goods & impose new sanctions on officials supporting Russia's war on Ukraine. The G-7 leaders spoke virtually with Ukrainian Pres Volodymyr Zelenskyy. During this portion of the 3-day annual summit, the leaders focused on Ukraine. Russia's war on Ukraine, which was launched in late Feb, was already at the center of attention as G-7 leaders opened their summit yesterday. Pres Biden said Russian Pres Vladimir Putin "has been counting on, from the beginning, that somehow NATO and the G-7 would splinter, but we haven’t and we’re not going to." British Prime Minister Boris Johnson urged the leaders not to cave to "fatigue." The session gives the leaders the opportunity to show Zelenskyy their unity commitment to supporting Ukraine. Biden is prepared to announce that the US is offering an advanced surface-to-air missile system & additional artillery support to Ukraine.
G7 leaders set to pursue Russian oil price cap, US to send anti-air missile system
NATO Secretary-General Jens Stoltenberg said the military alliance is poised to increase the number of its high-readiness forces to well over 300K as part of what he described as “the biggest overhaul of collective defense and deterrence since the Cold War.” His comments come as NATO leaders prepare to convene in Madrid, Spain this week to decide on the Strategic Concept, the 30-member alliance's most important document. The text, which is updated roughly every decade, will reaffirm NATO's values, provide a collective assessment of the security challenges & act as a guide to the group's future political & military development. Stoltenberg repeated the alliance's intention to recognize Russia as the “most significant and direct threat” to security in the wake of Pres Vladimir Putin's onslaught in Ukraine. “Our NATO Summit in Madrid this week will be transformative with many important decisions, including on a new Strategic Concept for a new security reality,” Stoltenberg said. “We will transform the NATO Response Force and increase the number of our high readiness forces to well over 300,000,” he added. This pledge reflects an increase of 650% given that NATO's enhanced Response Force currently comprises around 40K troops. “These troops will exercise together with home defense forces, and they will become familiar with local terrain facilities … so that they can respond smoothly and swiftly to any emergency,” Stoltenberg said. It follows a coordinated appeal from Russia's neighbors to shore up the defenses on Europe's eastern flank. The Baltic nations of Estonia, Latvia & Lithuania have said Russia's invasion of Ukraine requires a fundamental change to NATO's existing military construct. The 3 countries, all members of NATO & the EU, have repeatedly called on NATO to provide a substantial increase in the number of foreign troops stationed in the region & to rethink the alliance's existing “tripwire” approach.
NATO to increase its high-readiness forces to over 300,000 in massive buildup
Oil futures rose to score a 2nd gain in a row, with the US crude benchmark settling
at its highest price in almost a week. Upbeat US economic data helped
to ease worries about a potential slowdown in energy demand as the
Group of Seven nations was set to announce an agreement to implement a price cap on Russian oil. West Texas Intermediate crude for Aug rose $1.95 (1.8%) to settle at $109.57 a barrel.
Prices based on the front month settled at their highest since Jun 21.
Oil futures log a second gain in a row
Gold futures ended lower as the Group of Seven nations prepared to ban imports of the yellow metal from Russia. Pres Biden tweeted yesterday that the G-7 would “ban the import of Russian gold” & the UK gov has informed the press that the US, UK, Japan & Canada had agreed to the ban — although the resolution has yet to be formally adopted by the supranational institution. Members of the G-7 were meeting today. Gold futures for Aug fell $5 to settle at $1824 per ounce after touching an intraday high of $1842. Industrial metals prices climbed today after sliding sharply last week as recession fears shook commodity prices, sending prices of everything from copper to crude oil to wheat lower. The 2nd qtr of 2022 is on track to be the worst qtr for base metals since the recession of 2008-2009. Gold prices on today traded lower in the immediate wake of data showing that orders at US factories for long-lasting goods rose by a stronger-than-expected 0.7% in May.
Gold futures end lower, while copper bounces after sharp selloff
Without dramatic news investors had a chance to collect their thoughts about the future for the stock market. Today Dow remained around breakeven all day although it finished near session lows. More monthly economic reports will be released this week. So far, Dow is down 3240 in Q2 & off almost 5K YTD (see below).
Dow Jones Industrials
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