Dow dropped 496, decliners over advancers a massive 13-1 & NAZ tumbled 200. The MLP index was off 2+ to the 227s & the REIT index declined a very big 6+ to 372. Junk bond funds saw selling & Treasuries were very heavily sold, raising yields substantially. Oil was off 1, falling below 71, & gold dropped 12 to 1914.
AMJ (Alerian MLP Index tracking fund)
Hiring by US companies surged more than expected in Jun, pointing to a labor market that remains tight even in the face of higher interest rates, according to the ADP National Employment Report. Companies added 497K jobs last month, more than double the 228K gain that was predicted. That is also higher than the downwardly revised 267K increase recorded in May & marked the largest one-month gain in more than a year. The surprise jump in payrolls comes despite an aggressive interest rate hike campaign by the Federal Reserve that spanned 15 months. In a potentially welcoming sign for the Fed as it tries to wrangle stubborn inflation under control, wages continued to moderate in Jun. Annual pay rose 6.4% last month, down from 6.6% in May. For workers who switched jobs, wages climbed 11.2%, down almost a full percentage point from the previous month. "Consumer-facing service industries had a strong June, aligning to push job creation higher than expected," said ADP chief economist Nela Richardson. "But wage growth continues to ebb in these same industries, and hiring likely is cresting after a late-cycle surge." The distribution of job gains was concentrated in the service-providing sector, with the majority stemming from the leisure & hospitality industry, which added 232K new workers, & trade, transportation & utilities, with a gain of 90K. The most significant losses, meanwhile, were concentrated in the manufacturing sector, which saw payrolls tumble by 42K & the information sector also shed 30K, while financial activities cut 16K
Private sector job growth unexpectedly surges in June, ADP
The US saw an increase in auto sales during Q2 despite higher prices for customers. Auto
sales rose 16.8% to just over 4.1M in Apr-Jun,
primarily fueled by stifled demand from nearly 2 years of factories
worldwide suffering from a computer chip shortage. Ivan Drury,
director of insights for Edmunds.com, said that the
trend in lower average prices & automaker discounts for most of the
past year began to stall out in Jun as buyers paid an average of
$46K for a vehicle, according to JD Power estimates. Inventory on dealer lots was expected to be a bit over 1.2M in Jun. For the automakers in Q2, General Motors (GM) led the way
with almost 690K sales, a 19% increase from a year ago. Toyota (TM) upped
its sales 7% from last year, landing in 2nd place with 569K
sales. Nissan sales jumped 33%, Subaru saw a 22% increase, sales
for Hyundai & Kia both rose by 15% & Stellantis sales increased 6%
for the qtr. Honda saw a massive increase of 45% compared to
last year, but a parts shortage in 2022 left the manufacturer with poor
sales numbers. Electric vehicle sales also continued on an upward trend, accounting
for 7.2% of all new vehicle sales during H1-2023, which
comes out to more than 557K vehicles sold. Last year, just over 807K EVs were sold, approximately 5.8% of new vehicle sales. Tesla (TSLA) continued to dominate
the industry in EV sales with nearly 337K across the US since the
start of the year, according to estimates from Motorintelligence.com. GM was a distant 2nd with about 34K sold – the
Chevrolet Bolt & Bolt Electric Utility Vehicle accounted for most of
the sales. Hyundai saw a big increase over last year with more than
22K EVs sold. The average interest rate for a new vehicle is expected to stay around 7% throughout the summer.
US new vehicle sales continue on upward trend during second quarter
The 2-year Treasury yield reached a level not seen in 16 years as investors absorbed strong jobs data that could mean further tightening from the Federal Reserve. The 2-year Treasury was last up by more than 11 basis points at 5.063%. The yield hit a high of 5.120%, which was last exceeded on Jun 15, 2007, when it reached 5.121%. Meanwhile, the yield on the 10-year Treasury was last trading at 4.037% after jumping 9 basis points. Yields & prices move in opposite directions & 1 basis point equals 0.01%. Investors may now be raising their expectations for a stronger economy that could point to the Fed resuming its hiking campaign this month after a pause. The central bank next decides on interest rates on Jul 26.
2-year Treasury yield hits 16-year high after ADP jobs data shatters expectations
Dow Jones Industrials
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