Markets advance on hopes for rate cuts coming sooner

Dow went up 107, advancers over decliners 4-1 & NAZ was 103 higher.  The MLP index added 1 to the 281s  & the REIT index was steady in the 363s.  Junk bond funds eased higher & Treasuries had a tiny amount of selling which allowed rates to inch higher.  Oil rose in the 78s (more below) & gold jumped 21 to 2330 on war fears.

AMJ (Alerian MLP Index tracking fund)

Treasury yields were lower, adding to the declines seen Fri after the Apr jobs report showed weaker-than-expected payrolls growth.  The yield on the 10-year Treasury was off 2 basis points at 4.481% & the 2-year Treasury yield slipped 1 basis point to 4.799%.  Yields & prices move in opposite directions & 1 basis point is equivalent to 0.01%.  US payrolls rose by just 175K last month, the Bureau of Labor Statistics said on Fri, short of the estimate of 240K.  The unemployment rate rose to 3.9%, against an estimate that called for it to hold steady at 3.8%.  Wage growth was also less than expected.  Uncertainty about how many rate cuts, if any, will take place this year & when they might begin has grown in recent weeks, with many investors now expecting fewer cuts & not until later in the year.  Fri's weak labor report could allow the Federal Reserve to move sooner to cut rates.

Treasury yields slip as hope for Fed rate cuts increases after latest jobs data

Israel's military said it has begun evacuating Palestinians from parts of Gaza’s southern city of Rafah, ahead of an expected military operation where roughly ½ of the enclave's entire population is sheltering.  “For your safety, the IDF appeals to you evacuate immediately to the expanded humanitarian area in Al-Mawasi,” Avichay Adraee, the Israel Defense Force's head of the Arab media division, wrote in a post on X.  “The IDF will act with extreme force against terrorist organizations in your areas of residence, as it has done so far. Anyone who is close to terrorist organizations puts his life and the life of his family at risk,” the post added.  Al Mawasi is a small stretch of coastal scrub land, just over ½ a mile wide & 8.6 miles long, & is already host to several hundred thousand displaced Palestinians.  More than 1.2M people are currently sheltering in Rafah, most of whom fled other parts of the Gaza Strip, predominantly living in tents & without access to sufficient water, food & basic medicine.  The White House — as well as the UN, WHO & other multinational organizations — has urged Israel against an offensive in Rafah, warning of catastrophic humanitarian consequences.  Israeli Pres Benjamin Netanyahu said that an operation there is essential to his country winning the war against Hamas.  Netanyahu & his far-right governing coalition have rejected Washington’s supplications, saying that Israel would conduct its offensive into Rafah with or without US support.  “The idea that we will halt the war before achieving all of its goals is out of the question. We will enter Rafah and we will eliminate the Hamas battalions there – with or without a [cease-fire] deal, in order to achieve total victory,” Netanyahu said last Tues.

Israeli military tells Palestinian civilians in eastern Rafah to ‘evacuate immediately’

US oil rose, trying to recover from last week's steep declines, after Israel told Palestinians to evacuate the southern Gaza city of Rafah, & Saudi Aramco raised its official crude prices.  West Texas Intermediate Jun contract was $78.88 a barrel, up 77¢ (1%) & YTD, US crude oil has gained 10%.  Brent Jul contract was: $83.66 a barrel, up 70¢ (0.8%) & YTD, the global benchmark has risen 8.5%.  Oil dropped more than 6% last week, as traders rolled back geopolitical risk premium on fears of war between Iran & Israel, & as crude inventories in the US surged on weaker demand.  But tensions in the Middle East are rising again after the Israel Defense Forces told some 100K Palestinians to leave the southern Gaza city of Rafah.  Efforts to broker a cease-fire between Israel & Hamas have stalled again, with the 2 sides accusing each other of sabotaging a deal.

U.S. crude oil rises as Israel tells Palestinians to evacuate Rafah

The stock markets are awaiting developments in Gaza.  In the meantime, more earnings reports are coming & Fed officials will give speeches.

Dow Jones Industrials