Dow jumped 429 but 150 under early highs, advancers over decliners 4-1 & NAZ gained 118. The MLP index was up 1+ to the 226s & the REIT index rose 4+ to the 364s. Junk bond funds were purchased along with the rise in the stock market & Treasuries slid a little lower (more below). Oil was up 3+ to the 91s & gold soared 45 to 1676.
AMJ (Alerian MLP index tracking fund)
Hiring in the US remained solid in Oct, presenting challenges for the Federal Reserve's inflation fight. Employers added 261K nonfarm jobs, more than expected and in line with the previous month's 263K. The unemployment rate edged higher to 3.7%, up from 3.5% in Sep. Hourly pay remained brisk rising at 4.7% year over year, matching Sep. The Fed raised interest rates again this week in an attempt to try to bring inflation down from near a 40-year high. At the Fed meeting, Chair Jerome Powell said that in order to tame inflation, the central bank would likely have to raise rates high enough to weaken the job market. That could mean hiring will slow in the coming months or even that many employers will cut jobs & increase the unemployment rate. "The broader picture is of an overheated labor market where demand (for workers) substantially exceeds supply," Powell added. The policymakers want to see signs that job growth & wages are easing, he continued, "but I don't see the case for real softening just yet."
October jobs report solid, making Fed's inflation fight harder
Bond yields rose after the Oct nonfarm payrolls report showed the labor market remains strong, signaling the Federal Reserve will continue to aggressively hike interest rates. The 2-year Treasury note rose more than 9 basis points to hit a session high of 4.883%, its highest level since 2007, & the 10-year Treasury yield rose 8 basis points to 4.285%. Yields & prices have an inverted relationship & one basis point equals 0.01%. The moves came after nonfarm payrolls surged by 261K in Oct, according to data from the Bureau of Labor Statistics. That was much higher than the 205K that was expected. At the same time, the unemployment rate ticked up slightly to 3.7% from 3.5% a month earlier. The report shows that the labor market is still resilient even as the Federal Reserve raises interest rates to battle persistent high inflation. Fears of a looming recession fueled by the hikes have spread in recent weeks as the Fed's fight against persistently high inflation continues.
2-year Treasury yield notches new 15-year high on better than expected jobs report
Deliveries of US crude oil to Asia are set to touch a record 1.8M barrels per day this month, Kpler shipping data showed, as demand climbed on a widening discount to global oil. Refiners in China, India & South Korea are returning as big US crude oil buyers after several months of scooping up cheap Russian barrels. Asia's renewed buying reflects soaring demand for crude to produce diesel fuel & comes as Europe continued to stock up in the aftermath of Western sanctions on Russian purchases. Overall, US crude exports last week touched a weekly record of 5.1M barrels per day (bpd), boosted by higher shale production. The US benchmark West Texas Intermediate (WTI) traded at a nearly $9 a barrel discount to global Brent, compared to a $6 discount at the start of Sep. A wider discount makes US oil more affordable to foreign buyers. China will draw at least 450K bpd, its highest since Dec 2020 while India's demand is forecast to be the highest since Mar. Both are rising in the face of higher tanker rates up about 40% on some segments in Oct. China's refineries are stepping up production with the end of maintenance overhauls & receipt of higher fuel export quotas to lift sagging merchandise exports. US oil production was 11.9M bpd in Aug, the latest month of official figures, as producers raise activity after pandemic cutbacks.
US crude oil exports to Asia poised to hit record high
Investors liked the jobs report & were buying, although enthusiasm is starting to fade. Thoughts about more rate hikes are haunting nervous investors.
Dow Jones Industrials
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