Dow went up 33, advancers over decliners about 5-4 & NAZ gained 71. The MLP index was fractionally lower to the 225s & the REIT index fell 1+ to 367. Junk bond funds were mixed & Treasuries had limited selling, raising yields slightly. Oil dropped 2+ to the 67s & gold slid 8 to 1969.
AMJ (Alerian MLP Index tracking fund)
A majority of economists expect the Federal Reserve
to pause its interest-rate hike campaign next week for the first time
in 15 months, despite underlying signs of inflationary pressures within
the economy. That's according to a new survey,
which showed that most economists anticipate the Federal Open Market
Committee (FOMC) will hold rates steady at its Jun 13-14 meeting. Fed Chair Jerome Powell
has hinted the central bank will likely forgo a rate increase in Jun
in order to give policymakers time to evaluate the broader economic
impact of 10 consecutive hikes. "Having
come this far, we can afford to look at the data and the evolving
outlook and make careful assessments," Powell said in May. A number of central bank officials have reiterated that message,
stressing the need to examine how tighter monetary policy is affecting
the economy. However, a handful of more hawkish officials,
including St Louis Fed Pres James Bullard & Cleveland's Loretta
Mester, have hinted they are open to raising rates for the 11th straight time in Jun. About 40% of the survey economists expect a dissent at the meeting, a change from the nearly unified votes over the past year. "We expect a hawkish pause at the June FOMC meeting, with the FOMC
choosing not to hike, but signaling an expectation of additional hiking
through the SEP," said Nomura Securities economists Aichi Amemiya,
Jeremy Schwartz & Jacob Meyer, in a survey response. The economists are divided over whether the Fed will resume rate hikes
over the summer, or whether the current range of 5.00-5.25% represents
the peak. Roughly 1/3 of respondents are bracing for an 11th rate
hike in Jul.
Economists expect Fed to pause rate hike campaign this week
The federal gov's budget deficit grew to $2.1T over the last 12 months & is more than twice as large as the pre-pandemic deficit, according to a new report by the nonpartisan Committee for a Responsible Federal Budget (CRFB). The CRFB’s analysis found that the 12-month rolling deficit is up $170TB compared to last month due to a $236B monthly deficit that was announced last week for May 2023. That figure represents a significant increase on the $66B deficit that the federal gov ran last May & is attributable to spending increasing by 11% as tax revenue fell by 6%. "With deficits expanding, substantial policy change will be needed to bring spending and revenue in line," the CRFB wrote. "The roll-off (and possible reversal) of student debt cancellation and implementation of the Fiscal Responsibility Act are likely to help reduce deficits in the near term, but much more action will be needed to stem the unsustainable medium- and long-term trajectory of the debt." "Policymakers should work together to get the economy and our fiscal health back on track," the budget watchdog noted. CRFB wrote that deficits have totaled 8.1% of GDP, a measure of overall economic output, over the past year. That's more than 3 times the historical average of 2.5% & 3 percentage points higher than 2019. Further, tax revenue has slowed compared to a year as revenue as a percentage of GDP it has declined from a near-record of 19.6% of GDP in fiscal year 2022 to about 17.2% of GDP in the past 12 months, a level more in line with historical averages. By contrast, federal spending amounted to about 25.3% of GDP over the last 12 months, leaving a deficit amounting to 8.1% of GDP. The Congressional Budget Office (CBO) released its monthly budget update last week which found that in the first 8 months of fiscal year 2023, the deficit totaled $1.2T, an increase of $735B compared to the same period a year ago. The CBO's current projection for FY2023 is that the federal budget deficit will total $1.5T for the fiscal year, although the agency notes that estimate "is subject to considerable uncertainty" because revenue collections may continue to lag forecasts & spending may differ as well.
Federal deficit tops $2 trillion over last 12 months
Saudi Arabia is seeking stronger cooperation with China on trade investments & energy flows rather than competing with the superpower, said Energy Minister Prince Abdulaziz bin Salman. “We came to recognize the reality of today that China is taking, had taken a lead, will continue to take that lead. We don't have to compete with China, we have to collaborate with China,” he said. He added that there is value in working with China because they have taken the lead in getting the “right manufacturers” especially in the renewables space. “We will never go again to this zero-sum game.” On why the OPEC kingpin has eyes on China, Abdulaziz said he believes that China's oil demand is still growing, & it is a pie that Saudi Arabia is keen on capturing. China is the world's largest crude oil importer, & the Saudis have come up trumps as China's top supplier announced 2 major refinery deals, supplying 690K barrels a day of crude oil to Rongsheng Petrochemical & Zhejiang Petrochemical. The deals came on the heels of Chinese President Xi Jinping's visit to the kingdom last Dec. “This doesn’t mean we’re not going to collaborate with others,” the minister added, citing Europe, South Korea, Japan, the US & Latin America among the parties the country has trade relations with.
Saudi Arabia is seeking collaboration not competition with China, energy minister says
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