Dow climbed 36 with some selling in the last hour, advancers over decliners 5-2 & NAZ gained 38. The MLP index was steady in the 225s & the REIT index rose 3+ to the 433s. Junk bond funds fluctuated & Treasury yields were about even, Oil slid back to the 94s & gold went up 7 to 1769.
AMJ (Alerian MLP index tracking fund)
The US economy shrank at slightly slower pace in Q2 than previously reported, but continued to meet the criteria for a technical recession as raging inflation & higher interest rates weighed on spending. GDP, the broadest measure of goods &services produced across the economy, shrank by 0.6% on an annualized basis in Q2, the Commerce Dept said in its 2nd reading, below the initially reported 0.9% decline. GDP already contracted by 1.6% in Q1, the worst performance since the spring of 2020, when the economy was deep in the throes of the COVID-induced recession. Recessions are technically defined by 2 consecutive qtrs of negative economic growth & are characterized by high unemployment, low or negative GDP growth, falling income & slowing retail sales, according to the National Bureau of Economic Research (NBER), which tracks downturns. With back-to-back declines in growth, the economy meets the technical criteria for a recession, which requires a "significant decline in economic activity that is spread across the economy and that lasts more than a few months." Still, the NBER — the semi-official arbiter — may not confirm it immediately as it typically waits up to a year to call it. The NBER has also stressed that it relies on more data than GDP in determining whether there is a recession, such as unemployment & consumer spending, which remained strong in the first 6 months of the year. It also takes into consideration the depth of any decline in economic activity. "Thus, real GDP could decline by relatively small amounts in 2 consecutive qtrs without warranting the determination that a peak had occurred," the nonprofit said. The committee does not meet regularly, only when members decide it is warranted.
US economy remains in recession, GDP estimate confirms
As the Federal Reserve's annual Jackson Hole symposium kicks off, Kansas City Fed bank pres Esther George said she sees rate hikes thru the end of the year. "We have to see the federal funds rate reach a point where inflation begins to meaningfully decelerate because we can't really know what is the point at which a resting point will be," George said. Tomorrow, Fed Chair Jerome Powell will deliver a speech that could signal how high or how fast the central bank may raise interest rates in the coming months. His remarks will be scrutinized by traders & economists, & could potentially cause sharp swings in financial markets. Before the big announcement, George, along with Powell & the Fed Board, are set to convene & make the actual policy rate decision. "I haven't decided, 50 or 75. And for me, this hasn't been the most important question in terms of thinking about, really, the path," George explained. "The path is what I think is going to be important for the public to understand that we are in [sic] a process of tightening policy to bring inflation down, to get these imbalances that we see in the economy today in a better place." George noted that "tremendous" gov fiscal support, aggressive Fed policy & supply chain issues coupled with a spike in consumer demand have led to the current state of the economy. "That's the imbalance that I'm focused on, is to say: When do you begin to see that demand cooling? Because, of course, we can't fix the supply chain issues, but we can affect demand," she pointed out. "And that's really where I think we have to be focused right now, is bringing that in line."
The Fed is aiming to ‘meaningfully decelerate’ inflation by tightening policy, Kansas City Fed president says
Treasury yields were little changed ahead of the Federal Reserve's annual meet in Jackson Hole. The yield on the benchmark 10-year Treasury note gained less than 1 basis point to 3.11% after rising yesterday. The 10-year yield climbed above the 3% level for the first time in a month earlier this week. The yield on the 30-year Treasury bond fell 1 basis point to 3.308%, while the yield on the short-term 2-year Treasury note dropped less than 1 basis point to 3.382%. Yields move inversely to prices & a basis point is equal to 0.01%. Investors will be keenly watching for news from the economic symposium, which is expected to deliver an indication of the central bank's position on the extent of further rate hikes needed to combat inflation.
U.S. Treasury yields dip as investors await Fed comments from Jackson HoleTraders continue to twiddle their thumbs while the wait for Powell to speak tomorrow.
Dow Jones Industrials
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