Dow went up a modest 69, decliners over advancers 3-2 & NAZ gained 39. The MLP funds was off 2+ to the 184s & the REIT index was even at 411. Junk bond funds did little today while Treasuries saw heavy selling, raising yields. Oil slid lower to the 98s & gold sank 25 to 1735 (more on both below).
AMJ (Alerian MLP Index tracking fund)
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Federal Reserve officials in Jun emphasized the need to fight inflation even if it meant slowing an economy that already appears on the brink of a recession, according to meeting minutes. Members said the Jul meeting likely also would see another 50- or 75-basis point move on top of a 75 basis point increase approved in Jun. “In discussing potential policy actions at upcoming meetings, participants continued to anticipate that ongoing increases in the target range for the federal funds rate would be appropriate to achieve the Committee’s objectives,” the minutes stated. “In particular, participants judged that an increase of 50 or 75 basis points would likely be appropriate at the next meeting.” Raising benchmark borrowing rates by 3-qtrs of a percentage point in Jun was necessary to control cost-of-living increases running at their highest levels since 1981, central bankers said. They said they will continue to do so until inflation gets close to their 2% long-run goal. “Participants concurred that the economic outlook warranted moving to a restrictive stance of policy, and they recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist,” the document added. They acknowledged that the policy tightening likely would come with a price. “Participants recognized that policy firming could slow the pace of economic growth for a time, but they saw the return of inflation to 2 percent as critical to achieving maximum employment on a sustained basis,” the meeting summary stated. Officials at the meeting remarked that they needed to make the move to assure markets & the public that they are serious about fighting inflation. “Many participants judged that a significant risk now facing the Committee was that elevated inflation could become entrenched if the public began to question the resolve of the Committee to adjust the stance of policy as warranted,” the minutes continued. The document added that the moves, combined with communication regarding the stance of policy, “would be essential in restoring price stability.“
Fed sees ‘more restrictive’ policy as likely if inflation fails to come down, minutes say
Job openings fell sharply in May but still far outnumbered the level of people looking for work, the Bureau of Labor Statistics reported. Available positions totaled 11.2M for the month, a considerable drop from the upwardly revised 11.7M in Apr. As a share of the labor force, the rate of vacancies fell to 6.9% from 7.2%, according to the bureau’s Job Openings & Labor Turnover Survey (JLTS). Despite the decline, the level of job openings was better than the 11M estimate. There were 5.9M people counted as unemployed in the month, meaning there were 1.9 openings per every available worker, still around historical highs. Quits also declined slightly, falling to 4.2M as the resignation abated. The level of workers voluntarily leaving their jobs has soared in the Covid era, a sign of enhanced mobility during a time of extreme labor shortages. Federal Reserve officials watch the JOLTS report closely for signs of labor market slack. The US unemployment rate in May was 3.6%, just above where it was before the pandemic. However, there are 440K fewer Americans at work now than there were in Feb 2020. Layoffs nudged higher during the month to 14M after hitting a series low in Apr from data going back to 2000. Job openings declined sharply in manufacturing & professional & business services while increasing in retail trade & leisure & hospitality. Hires edged lower, falling to 6.5M, with the rate unchanged at 4.3%.
Job openings fell in May but still outnumber available workers by almost 2 to 1
General; Motors (GM) reported its worst quarterly sales in China since the beginning of the coronavirus pandemic, amid a resurgence of Covid-19 cases in the country and ongoing global supply chain problems. The automaker sold 484K vehicles from Apr-Jun in its largest market globally. Sales were down 35.5% from a
year earlier & the lowest since 461K vehicles during Q1-2020, when gov Covid restrictions brought China's
production to a standstill. GM said its brands in China are “focused on resuming production and
operations.” China sales were released less than a week
after GM warned investors that supply chain issues would materially impact its 2nd qtr earnings, while maintaining its previous guidance for 2022. Q2 sales in China follow the automaker on Fri reporting a 15.4% decline in its US sales during that time period. The stock fell 1.09.
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GM reports worst sales in China since onset of Covid-19 lockdowns
Gold futures fell to tally a 7th straight session decline, the longest stretch of consecutive losses since the 7-session loss ended on Mar 5, 2019. The fundamental factors behind gold's weakness are still in place, including a sharp tightening of monetary policy & weak demand for gold from central banks. Aug gold declined $27 (1.6%) to settle at $1736 an ounce, marking the lowest most-active contract settlement since last Sep.
Gold futures settle lower for a 7th straight session
Oil prices slid about 2% to a 12-week low in volatile trade, extending the prior session's heavy losses as investors grew more worried energy demand would take a hit in a potential global recession. Looking ahead, the forecast US crude inventories fell about 1.0M barrels last week. A drop in crude stockpiles could support prices. Brent futures for Sep fell $2.08 (2.0%) to settle at $100.69 a barrel. US West Texas Intermediate (WTI) crude fell 97¢ (1.0%) to settle at $98.53. Both benchmarks closed at their lowest since Apr 11, in technically oversold territory for a 2nd straight day.
Oil slides 2% to 12-week low on fears of global recession
Investors greeted the minutes with a luke warm reception, short of enthusiastic. The thoughts of a serious recession are on the minds of many investors. Going into a period of higher interest rates & what they can do to a stumbling economy are scary for investors who have become used to very low rates. There was selling into the close. Dow finished about 200 below its late day highs.Dow Jones Industrials
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