Dow went up 42, advancers over decliners 4-3 & NAZ gained 71. The MLP index was even in the 233s & the REIT index fell 2 to the 382s. Junk bond funds hardly budged & Treasuries had limited selling bringing slightly higher yields (more below). Oil slid back to the high 74s & gold was off 9 to 1955.
AMJ (Alerian MLP Index tracking fund)
China's economic growth missed forecasts in Q2, adding to worries over surging youth unemployment & a weak property sector & raising the likelihood the gov will double down on support for the faltering post-COVID-19 recovery. The world's 2nd-largest economy grew at a 6.3% annual pace in the Apr-Jun qtr, much slower than the 7% plus growth forecast given the anemic pace of activity the year before. Unemployment of youths aged 16-24 rose to a record 21.3% in Jun, up from 20.8% the month before. Investment in property development, a vital driver of both industrial & consumer demand, sank 7.9% in the H1 compared to a year earlier in a troubling sign of persisting weakness in an industry that slowed even before the pandemic as the gov moved to rein in excessive borrowing. Officials have acknowledged that the economy is facing stiff headwinds, but said they expected growth to still reach the ruling Communist Party's official target for this year of about 5%. The gov will adjust policies to stabilize growth, National Bureau of Statistics spokesman Fu Linghui said. Quarterly growth, the usual measure for other major economies, was 0.8%, according to gov data released Mon, in line with expectations but down sharply from 2.2% in Jan-Jun. Analysts have been far less optimistic than the Chinese gov about the outlook for the year, given weakening demand for Chinese exports in other major economies. The numbers are a "worrying result," said Moody's Analytics economist Harry Murphy Cruise. "China’s recovery is going from bad to worse," he said. "After a sugar injection in the opening months of 2023, the pandemic hangover is plaguing China’s recovery." Gov spending is likely to help key industries like real estate & construction, but won’t be a "silver bullet," he added. The 6.3% growth in China's GDP from Apr-Jun outpaced a 4.5% expansion in the previous qtr. The still robust growth is largely due to the economy growing just 0.4% a year earlier in Apr-Jun of 2022 amid strict lockdowns in Shanghai & other cities during COVID-19 outbreaks.
China's economy misses growth forecasts, raising odds of more support for its tepid recovery
Russia’s withdrawal from a critically important wartime deal that allowed the export of Ukrainian grain across the Black Sea has reignited fears about global food security, with analysts describing the initiative's demise as both an inevitable setback & a blow to markets. Hours before the agreement's expiry, Russia said that it would not renew the Black Sea Grain Initiative. The agreement, which was brokered by Turkey & the United Nations in Jul last year following Moscow's full-scale invasion of Ukraine, was a rare diplomatic breakthrough designed to avert a global food crisis. “Today is the last day of the Grain deal,” Kremlin Dmitry Peskov said. “When the respective parts for Russia’s benefit are fulfilled, Russia will return to the deal.” The Black Sea Grain Initiative has been repeatedly elongated in short increments, amid increasing discontent from Russia over perceived restrictions that limit the full dispatch of its own grain & fertilizer exports. Russian Pres Vladimir Putin reiterated these complaints over a weekend call with South African Pres Cyril Ramaphosa, saying, that the key objective of supplying grain to countries in need, including those on the African continent, had not been achieved. Wheat, corn & soybean prices all rose on the news. Wheat futures jumped 3% today, hitting a high of 689¢ bushel, its highest level since Jun 28 when the contract traded as high as 706¢. Wheat prices remain well below the peak levels of 1177¢ per bushel reached in May last year, however. Corn futures soared to a high of 526¢ per bushel, while soybean futures surged to a high of 1388¢ per bushel.
Wheat prices jump after Russia halts Ukraine grain deal
Treasury yields ticked up as investors considered the outlook for the economy & monetary policy ahead of a week with few key economic data reports. The yield on the 10-year Treasury inched up to 3.828% & the 2-year Treasury yield was last higher by about 2 basis points to 4.755%. Yields & prices move in opposite directions. One basis point equals 0.01%. Data published last week suggested that inflationary pressures were easing, with the consumer price index rising by 0.2% compared to the previous month & 3% on a yearly basis. That marked the lowest annual level since Mar 2021. Both figures were slightly lower than expected. Wholesale inflation also rose by less than anticipated, the latest producer price index report showed Thurs. Those data points are likely to inform the Fed's monetary policy decisions. Pressures from rising prices were a key factor in the central bank's decision to adopt a tighter monetary policy stance in early 2022. The Fed has since hiked interest rates 10 times across 11 meetings in an effort to ease inflation & cool the economy. Interest rates were left unchanged at the most recent central bank policy meeting, but markets are broadly pricing in a further rate hike from the Fed this month at the meeting on Jul 25-26.
Treasury yields fall as investors assess state of U.S. economy
Troubles for the China economy will be felt around the word. Also, wheat is important in the food chain & could add pressures on controlling inflation.Dow Jones Industrials
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