Dow went up 54, advancers over decliners about 5-4 & NAZ fell 86. The MLP index was fractionally higher to the 236s & the REIT index hardly budged at 371. Junk bond funds fluctuated & Treasuries saw more selling which raised yields (more below). Oil crawled back up to the 83s & gold added 2 to 1951.
AMJ (Alerian MLP Index tracking fund)
Inflation at the wholesale level rose more than expected in Jul, ending
a year-long streak of steady declines in consumer prices. The Labor Dept reported that its producer price index, which measures inflation at the wholesale level
before it reaches consumers, climbed 0.3% in Jul from the previous
month. On an annual basis, prices are up 0.8% & marked the first
increase in headline inflation since Jun 2022. Those figures are both higher than the 0.7% headline increase & 0.2% monthly figure forecast. There were other signs of underlying inflationary pressures within the economy in the report. Excluding
the more volatile measurements of food & energy, core
inflation rose 0.3% for the month – a reversal from the 0.1% decline in
Jun. The figure was up 2.4% on a 12-month basis. And the services
index climbed 0.5%, the biggest jump since Aug 2022, the Labor
Dept said. About 40% of the increase can be traced
to a 7.6% rise in prices for portfolio management. The cost for machinery & vehicle wholesaling; outpatient care;
chemicals & allied products wholesaling; securities brokerage,
dealing & investment advice & transportation of passengers also
moved higher. The goods index also edged 0.1% higher, an increase that is attributed to a jump in food prices.
Wholesale inflation accelerates in Jul for first time in 13 months
Treasury yields rose as traders assessed a slightly higher-than-expected measure of wholesale inflation. The yield on the benchmark 10-year Treasury note added 5 basis points to 4.135%, while the yield on the 2-year Treasury note ticked up nearly 4 basis points to 4.859%. The producer price index rose 0.3% for Jul, the Bureau of Labor Statistics reported. That came in slightly ahead of the 0.2% month-over-month increase expected. The report follows yesterday's consumer price index, which indicated that prices rose by 3.2% year-on-year in Jul, slightly below the 3.3% consensus forecast. However, the core CPI reading, which excludes volatile food & energy prices, increased by an annual 4.7%.
Treasury yields increase after producer prices are a touch hotter than expected
Pres Joe Biden called China a “ticking time bomb” because of its economic challenges & said the country was in trouble because of weak growth. “They have got some problems. That's not good because when bad folks have problems, they do bad things,” Biden said. His remarks were reminiscent of comments he made in Jun when he referred to Pres Xi Jinping as a “dictator.” China called the remarks a provocation. Those comments came shortly after Secretary of State Antony Blinken completed a visit to China aimed at stabilizing relations that Beijing described as being at their lowest point since formal ties were established in 1979. China's consumer sector fell into deflation & factory-gate prices extended declines in Jul. China may be entering an era of much slower economic growth with stagnated consumer prices & wages, contrasting with inflation elsewhere in the world. The US, the world's largest economy, has fought high inflation & seen a robust labor market. “China is in trouble,” Biden added. He said he did not want to hurt China & wanted a rational relationship with the country. Biden signed an exec order that will prohibit some new US investment in China in sensitive technologies like computer chips. China, which has the world's 2nd-largest economy, said it was “gravely concerned” about the order & reserved the right to take measures.
Biden calls China a ‘ticking time bomb’ over economic troubles
Dow Jones Industrials
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