Dow fell 86, decliners over advancers 5-2 & NAZ edged up 23. The MLP index remained down 1 to the 303s & the REIT index was off 1+ to the 416s. Junk bond funds slipped lower & Treasuries saw significant selling to which raised yields. Oil added 1+ to the 71s & gold dropped 37 to 2671 (more on both below).
Dow Jones Industrials
Coca-Cola Brasil invested 550M reais ($91M) to expand a concentrate beverage plant in the Brazilian state of Amazonas, the company said. The new plant was inaugurated today in the presence of Brazil's VP Geraldo Alckmin & other official authorities, Coca-Cola (KO), a Dow stock & Dividend Aristocrat, said. The stock fell 44¢.
Coca-Cola invests some $90 million to expand production in Brazil's Amazonas
The past year has been a strong one for North American import trade demand & that should continue for both ocean & air cargo into 2025, according to shipping giant Maersk, but so will supply chain disruptions. After year-on-year growth in North American market imports of roughly 20-24% across the first 3 qtrs of 2024, Maersk expects the Q4 numbers to also be in double-digit territory, according to Charles van der Steene, pres for Maersk North America, who described the full year 2024 as “very strong with resilient demand.” The surge of e-commerce shipments from Chinese online sellers has also fueled air freight prices. Maersk is returning its China air cargo service to its South Carolina hub at the start of 2025. “The e-commerce market has been surprisingly strong,” said van der Steene. But he said shipping companies expect the volatility that has pervaded global trade since Covid to be back in 2025. “Disruption will also be with us,” he added. “The topic of resilience within the supply chain will continue to be, and should be, on everyone’s agenda.” The disruptions include another potential Intl Longshoremen's Association strike at East Coast & Gulf ports across the US & tariff threats made by Pres-elect Trump ahead of an early Lunar New Year in Asia, when many manufacturing plants in China are idled for a month. These threats have stoked the price of the cargo container as shippers vie for the coveted boxes to ship their imports. Over the last several months, ocean freight spot rates had been on the decline, but on Mon when ocean carriers released their rates for the Dec 15-31 bookings, logistics managers said they jumped, a bullish demand indicator. In ContainerXChange's latest update, it reported North America has experienced the sharpest rise on a global basis, at 20%, in average container prices over the last 90 days. The National Retail Federation recently said inbound cargo traffic as a result of strike & tariff threats would fuel container import records in both Nov & Dec. Maersk has started to see a progression of trade moving over to the West Coast, Van der Steene said. With volumes remaining strong, “We can at least conclude that volumes are being pulled forward, or volumes are incredibly more strong now because of the anticipation of a potential disruption,” he continued.
Shipping giant Maersk sees ‘another year of disruption’ for global trade in 2025
An orderly selloff in the US gov bond market continued for a 5th straight day, with the 30-year bond's yield headed for its biggest weekly increase of the year. Driven in part by shifting expectations the Federal Reserve will cut interest rates next month & potentially pause next year, the rise in yields back toward their Nov highs also was fueled by weak demand for an auction of 30-year debt yesterday. The yield for that tenor reached 4.61% today, about 27 basis points higher on the week. Conviction that the Fed will drop its target for the US overnight lending rate to 4.25-4.50% on Dec 18 moved toward certainty this week after Nov inflation data in line with expectations were viewed as no obstacle. That was keeping downward pressure on short-term yields, while longer maturities priced in a risk that policymakers will simultaneously signal an intention to pause cuts next year amid economic resilient and halting progress toward lower inflation. Next week's Fed meeting includes an updated summary of economic projections showing where officials see interest rates over the next 3 years & their estimate of the neutral rate, a theoretical level that neither stimulates or restricts the economy. In Sep, the projections anticipated a drop in the policy rate to 3.25%-3.50%, or 4 qtr-point cuts assuming 1 next week. While traders continue to price in that a qtr-point rate cut next week will be followed by 2 more in 2025, economists at Deutsche Bank & BNP Paribas have predicted no Fed action in 2025. BNP Paribas expects next week's action to be accompanied by hawkish language supporting that view. They see the 10-year Treasury yield rising to 4.65% next year.
Bond market has worst week in months with less Fed action seen
Gold prices fell after bullion hit a more than 5-week high in the previous session and as the $ gained, but prices were on track for a weekly rise on expectations of a Federal Reserve rate cut next week. Spot gold was down 0.8% at $2658 per ounce, as the $ hovered near its highest in more than 2 weeks. Bullion hit its highest since Nov 6 yesterday & has risen nearly 1% for the week. US gold futures fell 1.1% to $2678. Underpinned by easing monetary policies, robust central bank buying & safe-haven demand, gold has shattered multiple record peaks this year. Traders now see a 97% chance of a 25 basis point rate cut at the Fed's Dec 17-18 meeting. The focus will also be on Chair Jerome Powell's commentary as market participants analyze US monetary policy for 2025, especially in the light of Pres-elect Donald Trump' tariff plan which may would stoke further inflation.
Gold slips, but set for weekly rise on potential Fed rate cut
Oil prices climbed about 2% to settle at a 3-week high, on expectations that additional sanctions on Russia & Iran could tighten supplies & that lower interest rates in Europe & the US could boost fuel demand. Brent futures rose $1.08 (1.5%) to settle at $74.49 a barrel & US West Texas Intermediate crude rose $1.27 (1.8%) to settle at $71.29. That was Brent's highest close since Nov 22 & put the contract up 5% for the week. WTI posted a 6% gain for the week & closed at its highest since Nov 7.
Oil up 2%, settles at 3-week high as more sanctions loom on Russia, Iran
Stocks headed for a losing week today despite Broadcom's (AVGO) jump to all-time highs after the chipmaker predicted an AI-driven sales surge. The Dow had a losing week, with the blue-chip index on track for its 7th straight losing session, what would be its longest losing streak since Feb 2020. But AVGO's market cap surpassed $1T after execs predicted an AI sales gain of around 65%, a much brisker pace than expected. Meanwhile, the last pieces of economic data have have supported another rate cut from the Federal Reserve next week. But persistently sticky inflation could force the Fed to tread more slowly next year.
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