Dow jumped 237, advancers over decliners 4-1 & NAZ gained 172. The MLP index bounced back 5+ to the 188s & the REIT index went up 4+ to 415. Junk bond funds were bid higher & Treasuries saw more selling while stocks climbed higher. Oil rebounded 4+ to the the 103s & gold crawled up 3 to 1740.
AMJ (Alerian MLP index tracking fund)
Weekly jobless claims nudged higher while the US trade deficit hit its lowest level of the year in May as Covid-related shutdowns gripped China, according to new economic data. Initial filings for unemployment benefits totaled 235K for last week, a gain of 4K from the previous period & slightly more than the 230K estimate, according to the Labor Dept. The total was the highest since Jan 15 & raised the 4-week moving average to 232K, its highest level since last Dec. Continuing claims, which run a week behind, also moved up, rising 51K to 1.37M, higher than the 1.33M estimate. Also job placement firm Challenger, Gray & Christmas reported that planned layoffs soared in Jun to 33K, a 57% jump from a month ago & the highest total since Feb 2021. The firm noted that the auto sector, which typically lays off this time of year, announced 10K cuts, bringing the yearly total to 15,6K, a 155% increase from the same period in 2021. Of the 30 industries the company follows, 10 have announced more cuts this year than in 2021. Layoff announcements have soared in Q2 after an extremely low level of cuts in the first 3 months of the year. Thru Jun, the annual total of 133K is down 37% from a year ago, but the 2nd qtr is the highest quarterly total since Q1 of 2021.
Jobless claims edge up to highest since January; planned layoffs soar; trade deficit hits 2022 low
Prices at the pump have retreated from Jun's never-before-seen levels but remain stubbornly high. Some relief could be in sight. US gasoline futures have dropped more than 11% this week, following a decline in oil prices as recession fears spark concerns around a drop-off in demand. The national average for a gallon of gas stood at $4.75 yesterday, down from the record $5.01 hit on Jun 14. But prices are still $1.62 higher than this time last year. California has the highest state average, at $6.18. The state's Mono county is currently averaging $7.22 per gallon. South Carolina's average of $4.25 is the lowest in the US. Patrick De Haan, head of petroleum analysis at GasBuddy, said the national average could drop to $4-4.25 by mid-Aug, barring a price spike in oil. West Texas Intermediate (WTI) crude, the US oil benchmark, slid below $100 per barrel yesterday for the first time since mid-May. Oil makes up more than ½ the cost of gasoline, with refining expenses & taxes, among other things, also influencing prices. Yesterday WTI traded around $99.51 per barrel, while gasoline futures stood 1.2% higher at $3.27 per gallon. Prices at the pump tend to rise faster than they fall, as stations look to lock in profits in an ultra-competitive business.
Gasoline futures are dropping, which could mean more relief at the pump
Treasury yields were higher today, extending gains even as the closely watched 2-year/10-year yield curve remained inverted — a key recession signal. The yield on the benchmark 10-year Treasury note rose over 4 basis points to 2.952%, while the yield on the 30-year Treasury bond was up 3 basis points to 3.151%. Yields move inversely to prices & a basis point is equal to 0.01%. Market pros track the spread between longer-duration Treasury yields & shorter-duration yields, with the former typically higher. However, the 2-year Treasury yield climbed nearly 5 basis points to 3.008% today, holding above the 10-year. That inversion, particularly if sustained, is often interpreted as a warning sign that the economy may be weakening, & a recession could be on the horizon. The 2-year to 10-year curve first inverted on Mar 31, then again briefly in Jun. Treasury yields pushed higher on today after moving higher in the previous session on the release of the latest Federal Reserve meeting minutes. The documents showed that the central bank was leaning toward another 75 basis point rate hike this month as it focuses on bringing down inflation.
Treasury yields extend gains; bond markets still flash recession warning signal
Dow Jones Industrials
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