Dow jumped 307, advancers over decliners 3-2 & NAZ rose 199. The MLP index hovered in the 288s & the REIT index added 1+ to the 374s. Junk bond funds fluctuated & Treasuries were hit with more selling which increased yields. Oil inched higher in the 86s & gold shot up 37 to 2345 on growing MidEast tensions (more on both below).
AMJ (Alerian MLP Index tracking fund)
Richmond Federal Reserve Bank Pres Thomas Barkin said the unexpected surge in employment in Mar & drop in the unemployment rate made for a "quite strong jobs report." "Unemployment is at 3.8%. It's been 26 months in a row with unemployment below 4%," Barkin said. "That's the first time that's happened since the late '60s. So the job market is very strong." Barkin said companies are reluctant to layoff workers even with consumption showing signs of moderating because the experience of the ultra-tight job market in the early months of the pandemic remain fresh in employers' minds. Shortly before Barkin spoke, the Labor Dept had reported that a greater-than-expected 303K jobs had been created in Mar, the most since last May, & that the unemployment rate had dropped to 3.8% from 3.9%. The remarks from Barkin, a voter this year on Fed interest rate policy, also came a day after he said that he was finding it hard to reconcile the breadth of inflation he was been observing with the "kind of progress you'd want to make" in returning overall inflation to the Fed's 2% target. Investors are increasingly on the fence about when the Fed will begin cutting interest rates from the current level of 5.25% - 5.50%, where they've been since Jul. The most recent projections from Fed officials still showed the majority of policymakers expect 3, one-qtr-percentage-point cuts by the end of this year.
Fed's Barkin: "That's a quite strong jobs report"
Federal Reserve Governor Michelle Bowman said that it's possible interest rates may have to move higher to control inflation, rather than the cuts her fellow officials have indicated are likely & that the market is expecting. Noting a number of potential upside risks to inflation, Bowman said policymakers need to be careful not to ease policy too quickly. “While it is not my baseline outlook, I continue to see the risk that at a future meeting we may need to increase the policy rate further should progress on inflation stall or even reverse,” she said to Fed watchers. “Reducing our policy rate too soon or too quickly could result in a rebound in inflation, requiring further future policy rate increases to return inflation to 2 percent over the longer run.” Bowman is a permanent voting member of the rate-setting Federal Open Market Committee. Since taking office in late 2018, her public speeches have put her on the more hawkish side of the FOMC, meaning she favors a more aggressive posture toward containing inflation. Bowman said her most likely outcome remains that “it will eventually become appropriate to lower” rates, though she noted that “we are still not yet at the point” of cutting as “I continue to see a number of upside risks to inflation.” “Given the risks and uncertainties regarding my economic outlook, I will continue to watch the data closely as I assess the appropriate path of monetary policy, and I will remain cautious in my approach to considering future changes in the stance of policy,” Bowman added. Weighing inflation risks, she said that supply-side improvements that helped bring numbers down this year may not have the same impact going forward. Moreover, she cited geopolitical risks & fiscal stimulus as other upside hazards, along with stubbornly higher housing prices & labor market tightness. “Inflation readings over the past two months suggest progress may be uneven or slower going forward, especially for core services,” Bowman continued.
Fed Governor Bowman says additional rate hike could be needed if inflation stays high
Apple (AAPL), a Dow stock, is laying off 614 workers
in California following reports that emerged earlier this year that the
tech giant is abandoning its effort to build an electric car. A state filing from AAPL shows that the job cuts will impact 8t offices in Santa Clara County &d will go into effect on May 27. The
filing did not name the project, but roles affected by the layoffs
include "machine shop" managers, product design engineers & hardware
engineers. In Feb, AAPL announced internally that it was canceling its effort to build an electric car, dubbed Project Titan. The company spent Bs of $s on the project & the move
surprised the 2000 employees who were working on it. The outlet said that some of the workers would be
redirected to focus on AAPL's generative artificial intelligence
division, while others will be laid off. In 2017, CEO Tim Cook confirmed that the company was working on
autonomous systems that could have applications in the self-driving car
segment. That year, AAPL obtained a permit from the state of
California to test vehicles equipped with self-driving equipment on
public roads. But ultimately, top execs decided in Feb of this year to scrap the project after it reached a "make-or-break point." The stock
Apple announces massive job cuts after scrapping electric car project
Gold rose to a fresh record even as the $ & treasury yields climbed after the US added far more new jobs than expected last month as Middle East tensions rise after Iran vowed to retaliate following an attack on its embassy in Syria this week. Gold for Jun closed up $36 to settle at $2345 per ounce. The rise comes on heightened intl tensions, as Iran vowed to retaliate against Israel's Mon strike to Iran's embassy in Syria, which killed senior members of its Islamic Revolutionary Guard Corps. The strike, which Iran blames on Israel & the US, raises fears of a wider Middle East war as Israel continues its attacks in Gaza as it looks to wipe out the Hamas militant group. The Bureau of Labor Statistics released its non-farm payrolls report for Mar, reporting a rise of 303K new jobs last month, blowing past the consensus expectation for a rise of 200K positions. The $ rose following the report, making gold more expensive for intl buyers, with the ICE dollar index last seen up 0.2 points to 104.32. Treasury yields were also higher, bearish for gold since it offers no interest. The 2-year note was last seen paying 4.725%, up 6.7 basis points, while the yield on the 10-year note was up 5.6 basis points to 4.373%.
Gold Rises to a Fresh Record as Middle East Tensions on the Rise
West Texas Intermediate (WTI) crude oil closed higher, rising to a fresh 5-month high as supplies lag demand with OPEC+ cuts continuing, while geopolitical risk is rising on the threat of a wider Middle East war & the US added far more new jobs than expected last month. WTI crude oil for May closed up 32¢ to settle at $86.91 per barrel while Jun Brent crude, the global benchmark, was last seen up 60¢ to $91. Oil's rise to the highest since late Oct comes as OPEC+ this week left its 2.2M barrels per day of voluntary production cuts in place as the group looks to winnow global inventories to support high prices. The cartel will review whether to extend the cuts, due to expire at the end of the 2nd qtr, at a Jun ministerial meeting. Geopolitical worries are also on the rise, as Iran vowed to retaliate against Israel's Mon strike to Iran's embassy in Syria, which killed senior members of its Islamic Revolutionary Guard Corps. The strike, which Iran blames on Israel & the US, raises fears of a wider Middle East war which could disrupt oil production from the Persian Gulf region as Israel continues its war in Gaza as it looks to wipe out the Hamas militant group. A hot US economy is also supporting prices, even as it raises concern the Federal Reserve will keep interest rates at 23-year highs & not cut rates as expected. The US added 303K new jobs last month, more than ½ again above the estimate for a rise of 200K jobs.
WTI Oil Rises on Tight Supply, Geopolitical Concerns and a US Economy that Continues to Run Hot
The prevailing story of a strong US economy hasn't changed much in the past year as economic data has persistently topped expectations. Today's Mar jobs report was more of the same. While investors still expect interest rate cuts, they are not bothered about that economic strength may get in the way of rate cut expectations. Negative investors are buying a lot of gold. The disconnect between economic strength & safe haven gold is not getting a lot of attention. With today's market rise, Dow managed to gain 97 this week.
Dow Jones Industrials
No comments:
Post a Comment