Dow went up 238 (close to session highs), advancers over decliners 3-2 & NAZ gained 152. The MLP index was about even in the 182s & the REIT index gained 4 to the 463s. Junk bond funds fluctuated & Treasuries continued to be weak. Oil inched up to 72 & gold slid back 2 to 1802 (more on both below).
AMJ (Alerian MLP Index tracking fund)
Treasury Secretary Janet Yellen urged Congress to raise or suspend the debt ceiling by the end of the month, warning that her dept will need to deploy "extraordinary measures" beginning Aug 2 to prevent the gov from defaulting. "If Congress has not acted to suspend or increase the d ebt limit by Monday, August 2, 2021, Treasury will need to start taking certain additional extraordinary measures in order to prevent the United States from defaulting on its obligations," Yellen wrote in a letterto the top 4 congressional leaders. The debt ceiling, which is currently around $22T, is the legal limit on the total amount of debt that the federal gov can accrue; according to the Committee for a Responsible Federal Budget. It applies to both the $16.2T held by the public & the $5.9T owed by the gov. In 2019, former Pres Trump suspended the nation's borrowing limit for 2 years, but that suspension is poised to expire on Jul 31 & Dems seemingly do not have a plan yet to raise the limit or suspend it again. "We’re considering all options," House Speaker Nancy Pelosi said. If Congress is unable to increase the debt limit, the Treasury would enter uncharted territory, incapable of paying bills – including payments to Social Security beneficiaries, gov employees or service members – since it would have no cash on hand. The Treasury Dept would be unable to issue any more bills or bonds & would instead have to rely on tax revenue & emergency accounts to pay bills.
Covid cases are on the rise in all 50 states & DC as the delta variant rapidly spreads across the US & the virus once again tightens its grip. The US is reporting an average of about 43K new cases per day over the past week — far below pandemic highs but up 65% over the previous 7 days & nearly 3 times as high as the level 2 weeks ago, data compiled by Johns Hopkins University shows. Cases hit a 15-month low in late Jun before they began to rise yet again as fewer people got vaccinated & the more infectious delta variant took hold in the country. Vaccination rates peaked in Apr at more than 3M shots per day but have dropped off considerably in recent months to around 530K a day, according to the Centers for Disease Control & Prevention. Hospital admissions of Covid patients are up 32% compared with one week ago. The count of daily Covid deaths, which typically lag an increase in case counts by a few weeks or more, has ticked upward but not at the same pace as cases or hospitalizations. Many Americans most vulnerable to the virus also now have some level of protection, as 89% of seniors have received at least one shot. The overwhelming majority of serious Covid cases — 97% of hospital admissions & 99.5% of Covid deaths — are occurring among those who are not vaccinated, Surgeon General Vivek Murthy said.
US economic growth faltered slightly in Jun compared with the previous month,
according to the Federal Reserve Bank of
Chicago. The Chicago Fed National Activity Index, which measures overall
economic activity & related inflationary pressure, fell to 0.09 in
Jun from 0.26 in May. The index is comprised of 85 economic indicators drawn from 4 broad categories of data: production & income;
employment, unemployment & hours; personal consumption & housing; & sales, orders & inventories. In Jun, 40 of the 85
individual indicators deteriorated from May, while 45 made positive
contributions to the index last month. The contribution of the employment, unemployment & hours category to the index dropped to 0.09 in Jun from 0.15 in May. Although employment rose by 850K jobs in Jun, the jobless rate ticked up to 5.9% last month, partially offsetting the gains in the labor market. Production-related indicators, meanwhile, contributed just 0.01 to the index last month – a sharp decrease from the 0.26 it added in May. Industrial output climbed 0.4% in Jun, but manufacturing production shrank 0.1%. The contribution of the sales, orders & investors category to the index increase 0.06 in Jun. The data comes as a nationwide surge in the delta variant of COVID-19 rattles investors, who are worried that rising infections could bring about new lockdown measures and a drawn-out economic recovery.
Gold futures ended lower to post their first weekly loss in 5 weeks, as Treasury yields bounced & the $ edged higher. Gold for Aug fell $3 to settle at $1801 an ounce. For the week, the most-active gold contract marked a 0.7% loss. Gold's loss for the week follows choppy trading in many financial asset markets. A steep selloff in equities on Mon & other assets viewed as risky added to a safe-haven Treasury rally that drove the yield on the 10-year note to a 5-month lows. Investors, however, rushed in to buy the dip in stocks, while the Treasury rally lost steam, allowing yields to rise. The greenback also firmed, with the ICE US Dollar Index on track for a 0.2% weekly rise. Higher Treasury yields can raise the opportunity cost of holding nonyielding assets, while a stronger $ makes commodities priced in the unit more expensive to buyers using other currencies. Gold prices found some support, moving back above the $1800 mark right after research firm IHS Markit said its preliminary composite output index for the US fell to a 4-month low of 59.7 in Jul, from 63.7 in Jun.
Oil futures edged lower, easing back from a 3-session rise that allowed prices to rebound from Mon's drop to the lowest settlements since May. Oil futures edged lower today, easing back from a 3-session rise that allowed prices to rebound from Mon's drop to the lowest settlements since May. West Texas Intermediate crude for Sep fell 12¢ to $71.79 a barrel, leaving the US benchmark about flat for the week, based on the front-month contracts. Sep Brent, the global benchmark, was off 15¢ at $73.64 a barrel, leaving it also about even for the week. Crude plunged Mon, with WTI dropping more than 7%, in a broad selloff that was attributed in part to worries about the spread of the delta variant of the coronavirus & it's impact on energy demand. Crude & other assets, including equities, subsequently bounced back, posting gainns for 3 sessions in a row, as investors proved eager to buy the dip. Data from the Energy Information Administration released Wed revealed a weekly increase in US crude supplies, following 8-straight weeks of declines, but stocks at the nation’s storage hub at Cushing, Okla fell to their lowest since Jan 2020.
Dow Jones Industrials