Markets climbed after GDP is data was revised higher

Dow gained 269, advancers over decliners about 2-1 & NAZ was off only pennies.  The MLP index added 1+ to the 228s & the REIT index rose 2+ to 371.  Junk bond funds were little changed & Treasuries had heavy selling, driving yields substantially higher.  Oil was up pennies in the 69s & gold slipped back 6 to 1915 (more on both below).

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The number of Americans filing new claims for unemployment benefits fell last week by the most in 20 months, the latest sign of the economy's resilience that could push the Federal Reserve to resume raising interest rates in Jul.  The unexpected decline in applications reported by the Labor Dept reversed a recent jump, which had left initial jobless claims over the prior 3 weeks hovering at levels last seen in Oct 2021.  The elevated readings had led some economists to conclude that layoffs were picking up as the economy begins to feel the heat from the Fed's hefty rate hikes.  Persistent labor market strength is helping the economy to defy predictions of a recession by boosting wages.  The economy grew faster than previously estimated in Q1, other data showed today, thanks to robust consumer spending.  It appears to have maintained the momentum in Q2, with reports this month showing better-than-expected retail sales gains & a surge in housing starts.  Initial claims for state unemployment benefits decreased 26K to a seasonally adjusted 239K for last week.  The forecast called for 265K claims for the latest week.  Claims could become volatile in Jul, when automakers typically idle plants to retool for new models.  But these temporary plant closures do not always happen around the same time, which could throw off the model that the gov uses to strip out seasonal fluctuations from the data.  Claims, relative to the size of the labor market, are well below the 280K level that some economists say would signal a significant slowdown in job growth.  Employment growth has averaged 314K jobs per month this year.

US weekly jobless claims post biggest drop in 20 months

The Intl Brotherhood of Teamsters said that a nationwide UPS strike "is imminent," after walking away from the national bargaining table & demanding the package delivery service company to provide its best & final offer by tomorrow. UPS & the Teamsters, the union that represents over 340K UPS workers, have been in negotiations over a new contract since Apr, following complaints from many UPS employees over the 2018 contract & the company's working conditions.  Some of the union's requests include longer breaks, air conditioning in delivery trucks due to last summer's extreme heat & higher wages.  Although both parties have reached a consensus on many non-economic issues, the biggest hangup at this point is a cost-neutral contract.  If UPS does not return its best & final offer by tomorrow, the Teamsters threaten to strike by Aug 1, which could cause disruptions in the supply chain in the US & around the world.  The union also said Teamsters nationwide "overwhelmingly" authorized a strike this month with 97% approval.  UPS said yesterday that its negotiators provided the company's initial economic proposal, & this week, it was followed-up with a "significantly amended proposal" that addressed key demands from the union.  The stock was up pennies.
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Teamsters give UPS ultimatum, demanding best contract offer by Friday

As Federal Reserve Chair Jerome Powell & Pres Biden tout their fiscal policies on the world stage, one Harvard economist set the record straight on the state & future direction of the US economy.  "Voters are very unhappy about inflation and inflation's not going away. And the first part of ‘Bidenomics’ definitely contributed to that inflation. There's no question about it," Harvard University professor of economics Kenneth Rogoff said.  Speaking at a financial stability conference, Powell stated that he does not expect core inflation to return to the central bank's 2% target until 2025.  Meanwhile, the pres boasted about "Bidenomics" on the campaign trail, attributing it to pandemic recovery & "new" jobs.  "Today, the U.S. has the highest economic growth rate, leading the world economy since the pandemic, the highest in the world," Biden said.  "We created 13.4 million new jobs, more jobs in two years than any president has ever made in four."  Rogoff corrected Biden on a "tight" labor market, with minimal GDP growth & "not very good" productivity.  "He has these other things: the CHIPS Act, which was to sort of protect us from Taiwan, actually a good idea, but had too much social policy mixed in," the economist said.  "And then the Inflation Reduction Act, which I think it's more debatable. But the benefits, if there are, they're not coming for a long time. They're not going to be seen until after the election."  "So he's sort of stuck with the inflation and the stimulus that came from the first part of his administration," he continued.  The final rate for Q1 GDP showed annualized growth of 2%, higher than expectations of 1.4%.  Looking ahead to Q2, Rogoff noted that the "big picture" behind GDP depicts concerns around productivity.  "They are maybe creating jobs to the extent the policies are doing it, but they, at the same time, are possibly sacrificing productivity growth. I think that's a tradeoff that Bidenomics [is] probably willing to accept, but it has its costs in terms of our competition with China and America's stature in the world," the Harvard professor pointed out.  In terms of inflation, the Fed may have to be "very patient" in waiting to hit their 2% goal, Rogoff added.  Last month, the consumer price index reached 4%, its lowest level in 2 years.  "I think 2025 is probably optimistic to get to 2%. I think it's going to be longer than that," he said.  "I think they're going to keep raising interest rates until we see another financial crisis or some kind of big financial stress."  With no sign of inflation cooling down, Rogoff said that could mean policymakers & economists are still anticipating a recession.

Economist corrects president after touting 'Bidenomics' in Chicago speech

Gold prices fell toward a key $1900 mark to settle at the lowest since Mar as Federal Reserve Chair Jerome Powell's recent comments yesterday, weighed on the yellow metal.  Strength in the $ & Treasury yields, as upbeat US economic data raised the possibility of a Jul interest-rate hike by the Fed, contributed to gold's loss.  Gold futures for Aug fell by $4 to settle at $1917 per ounce.  That was the lowest finish for a most-active contract since mid Mar.  The positive final revision for first qtr US GDP to 2%, along with a drop in jobless claims, point to a Jul interest-rate hike by the Federal Reserve, & that pressured gold prices.  Against that backdrop, the ICE US Dollar index rose 0.4% to 103.31, while the yield on the 10-year was at 3.852%, up from 3.711% yesterday.  A 25 basis-point rate increase looks likely for Jul, but not a more aggressive increase as the PCE price index was slight under at 4.1% vs. 4.2% estimates.  Inflation is still elevated but showing some measure of control.

Gold down a third straight session to end at lowest price since March

Oil futures climbed, extending on a gain from a day earlier when gov data revealed a nearly 10M-barrel weekly drop in domestic crude inventories.  Still, tough talk from Federal Reserve Chair Jerome Powell & other global central bank chiefs on the need to keep tightening monetary policy in order to bring down inflation continued to cap gains.  West Texas Intermediate crude settled gained 21¢ to settle at $69.77 a barrel.  Yesterday, WTI settled 2.8% higher & Brent rose 2.5% after the Energy Information Administration reported that US commercial crude inventories fell by 9.6M barrels for last week.  The EIA report showed weekly inventory gains of 600K barrels for gasoline & 100K barrels for distillates.  However Powell, participating in a panel discussion at an ECB monetary policy forum in Sintra, Portugal, reiterated yesterday that a "strong majority" of Fed policy makers expect to deliver 2 more qtr percentage point interest-rate increases this year.  Powell also played down the idea the Fed has shifted to a pattern of delivering rate hikes at every other meeting, saying that he "wouldn't take moving consecutive meetings off the table at all."  Crude prices had difficulty following thru with gains early today on account of hawkish comments from the Fed as inflationary concerns continue.  Higher interest rates can raise the potential for a recession, which may lead to lower energy demand.

Oil prices notch back-to-back gains a day after data reveal a hefty drop in U.S. crude supplies

Today's mini rally was not very convincing.  Among other things, tech stocks on NAZ did not participate.  The threat of even higher interest rates continues to weigh on the stock market.

Dow Jones Industrials