Dow plunged 795 to session lows, decliners over advancers 4-1 & NAZ dropped 107. The MLP index declined 7+ to 185 & the REIT index nosedived 10+ to the 402s. Junk bond funds slid lower & Treasuries had more buying, reducing yields (more below). Oil sank a very big 5+ to the 102s & gold retreated 32 to 1769.
AMJ (Alerian MLP index tracking fund)
It's a big week for jobs data, but investors will be missing one key influential report; the ADP data, a widely viewed pre-cursor to the gov's monthly data. The human resources management software & services provider will pause the Jul 7 & Aug 3 releases of its monthly national employment report as the company retools its methodology. The revamped report will provide a "more robust, high-frequency view of the labor market and trajectory of economic growth" the company specified. "ADP's extensive dataset of over 26 million U.S. employees offers a tremendous ability to deliver a strong read of the labor market and pulse of U.S. employment," ADP chief economist Nela Richardson said. "As the leader in providing deep data on the world of work, our goal is to issue indicators that inform business leaders, members of academia, economists and policymakers with a reliable read of the workforce." In Apr, ADP announced it would collaborate on the new report with the Stanford Digital Economy Lab, which focuses on how technologies such as artificial intelligence are affecting the workforce, business & society. At the time, the firms said that the report's expanded research would include an "extensive microdata analysis to understand career paths for lower-wage workers" & create new academic research on topics related to economic growth & the future of work. ADP's move comes as its national employment report has previously received criticism for having a poor track record of predicting the private payrolls count in the Bureau of Labor Statistics' employment situation report due to methodology differences.
ADP revamping national employment report
Treasury yields were mixed as concerns about a potential economic recession continued to send investors in search of safety. The yield on the benchmark 10-year Treasury note dropped 8 basis points to 2.824%, while the yield on the 30-year Treasury bond fell more than 5 basis points to 3.072%. Yields move inversely to prices & a basis point is equal to 0.01%. The 2-year Treasury yield & other short-dated yields rose, however, flattening the yield curve. Markets reopened today following the July Fourth holiday after the major averages finished another losing week, compounding one of the worst first halves in decades. In this shortened week, investors are looking ahead to the release of Jun jobs report data on Fri. The estimates is for job growth to slow in Jun, with 250K nonfarm payrolls added, down from 390K in May. The unemployment rate is expected to hold at 3.6%. May factory orders today came in better than expected.
10-year Treasury yield slips as recession fears rattle market
The € fell to its lowest level in 2 decades as fears of a recession in the euro zone ramped up, with gas prices soaring & the Ukraine war showing no signs of abating. The € shed around 1.3% to hit $1.029, having earlier been as low as $1.028. Euro zone inflation hit a record 8.6% in Jun, prompting the ECB to give markets advance notice of its intention to hike interest rates for the first time in 11 years at its Jul meeting. However, growing fears of a recession may limit the central bank's capacity to tighten monetary policy. The Jul Sentix Economic Index showed investor morale across the 19-country euro zone has plunged to its lowest level since May 2020, pointing toward an “inevitable” recession. Record-high inflation in Europe has been abetted by skyrocketing gas prices over recent months. Natural gas prices in Europe extended their relentless rise, climbing to highs not seen since early Mar as planned strikes in Norway added to market woes about Russian supply cuts. The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was last seen trading up 7.8% to hit 175.5€s ($180.8) per megawatt-hour. All of these factors have converged to hit the € hard. The currency of the euro zone has lost over 9% of its value against the $ since the start of the year. The $'s strength continues, meanwhile, as risk-averse investors seek a safe haven & the US Federal Reserve embarks upon what looks to be an aggressive rate hike regime.
Euro slides to 20-year low against the dollar as recession fears build
Dow Jones Industrials
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