A big uptick in COVID-19 cases was too much for the buyers to handle this week. States that had been less affected are now having there highest daily new cases.
In the last few days, we have reported daily highs in new coronavirus cases. There is also an acceleration of younger people getting infected. The EU was reportedly considering its own restrictions on U.S. travelers, banning them from entering when it relaxes its border restrictions on July 1. Texas, Florida, and California have scaled back reopening efforts. New unemployment claims didn’t help either as another 1.48 million people applied for insurance.
All the majors were down but value was hit the hardest, down over 4%. The underperformance, in value, is just a continuation of what’s happened so far this year. The difference between growth and value now stands at over 25%.
The Baker Hughes rig count was down 1 this week. There are 265 oil and gas rigs operating in the US – down 702 over last year.
Brent Crude Oil fell 2.99% this week closing at $40.93/bbl
WTI Crude Oil fell 3.36% this week to close at $38.49/bbl
Heating Oil fell 5.74% this week closing at $1.15/gallon
Natural Gas declined 7.49% this week closing at $1.54 per million BTUs
Unleaded Gas fell 8.98% this week closing at $1.16/gallon
Metals Complex
Gold gained 1.56% this week closing at $1780.30/oz
Silver gained 1.05% on the week closing at $18.03/oz
Palladium declined 0.73% this week closing at $1894.40/oz
Platinum declined 0.97% this week closing at $819.30/oz
Copper gained 2.60% this week closing at $2.68/lb
Employment Picture
Weekly Unemployment Claims – Released Thursday 6/25/2020 – Initial jobless claims for the week ending June 20 decreased by 60,000 to 1.480 million. The 4-week moving average was 1.621 million declining by approximately 161k.
Job Openings & Labor Turnover Survey JOLTS – Released 6/9/2020 – The U.S. Bureau of Labor Statistics reported the number and rate of job openings declined to 5.0 million and 3.7% respectively, on the last business day of April. Over the month, hires declined to 3.5 million and separations decreased by 4.8 million to 9.9 million. Within separations, the quits rate declined to 1.4%. The layoffs and discharges rates decreased to 5.9%.
May Jobs Report–BLS Summary– Released 6/5/2020 – The US Economygained 2.5 million nonfarm jobs in May and the Unemployment rate declined to 13.3%. Average hourly earnings fell by 29 cents. Hiring highlights include Leisure and Hospitality +1.24 million, Construction +464k, Education and Health Services +424k, Retail Trade +368k, and Manufacturing +225k.
Average hourly earnings declined by 29 cents in May to $29.75.
U3 unemployment rate declined to 13.3%. U6 unemployment rate declined to 21.2%.
The labor force participation rate increased by 0.6% to 60.8%.
Average workweek increased by 0.5 hours to 34.7 hours.
Employment Cost Index – Released 4/30/2020 – Compensation costs for civilian workers increased 0.8% for the 3-month period ending in March 2020. The 12 month period ending on March 2020 saw compensation costs increase by 2.8%, same as the 12 month period ending March 2019. Wages and salaries increased 3.1 percent over the year and increased 2.9 percent for the 12-month period ending in March 2019. Benefit costs increased 2.1 percent for the 12-month period ending in March 2020. In March 2019, the increase was 2.6 percent. This report is published quarterly.
This Week’s Economic Data
Links take you to the data source
Personal Income– Released 6/26/2020 – Personal income decreased $874.2 billion or 4.2 percent in May according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) decreased $911.1 billion or 4.9 percent and personal consumption expenditures (PCE) increased $994.5 billion or 8.2 percent.
Third Estimate of 1st Quarter 2020 GDP – Released 6/25/2020 – Real gross domestic product (GDP) decreased at an annual rate of 5.0 percent in the first quarter of 2020, according to the third estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2019, real GDP increased 2.1 percent. This third GDP estimate is based on more complete source data than were available for the second and “advance” estimates issued prior. In the second estimate, the decrease in real GDP was also 5.0 percent. In the third estimate, an upward revision to nonresidential fixed investment was offset by downward revisions to private inventory investment, personal consumption expenditures (PCE), and exports. The decrease in real GDP in the first quarter reflected negative contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, and private inventory investment that were partly offset by positive contributions from residential fixed investment, federal government spending, and state and local government spending.
Durable Goods– Released 6/25/2020 – New orders for manufactured durable goods in May increased for the second consecutive month up $26.6 billion or 15.8% to $194.4 billion in May. Transportation equipment led the increase rising $20.9 billion or 80.7% to $46.9 billion.
New Residential Sales– Released 6/23/2020 – Sales of new single-family homes increased 16.6% to 676k, seasonally adjusted, in May. The median sales price of new homes sold in May was $317,900 with an average sales price of $368,800. At the end of May, the seasonally adjusted estimate of new homes for sale was 318k. This represents a supply of 5.6 months at the current sales rate.
Existing Home Sales– Released 6/22/2020 – Existing home sales declined for the third consecutive month in May. Sales declined 9.7% to a seasonally adjusted rate of 3.91 million in May. Sales are currently down 26.6% from one year ago. Housing inventory sits at 1.55 million units. Up 6.2% over last month. Down 18.8% over last year. Unsold inventory sits at a 4.8 month supply. The median existing home price for all housing types was $284,600.
Recent Economic Data
Links take you to the data source
Housing Starts– Released 6/17/2020 – New home starts in May were at a seasonally adjusted annual rate of 974k; up 4.3% above April but 23.2% below last May’s rate. Building Permits were at a seasonally adjusted annual rate of 1.220 million, up 14.4% compared to April but down 8.8% over last year.
Industrial Production and Capacity Utilization – Released 6/16/2020 – In MayIndustrial production increased 1.4%. The increase in industrial production is attributed to at least partial operations resuming in factories following the suspensions issued in response to Covid-19. Manufacturing increased 3.8%. Total industrial production was 92.6% of its 2012 average which is 15.3% lower in May than a year ago. Total capacity utilization increased 0.8% to 64.8% in May which is 15.0% below its long-run average.
Retail Sales – Released 6/16/2020 – U.S. retail sales for May increased 17.7% to $485.5 billion. U.S. retail sales are down 6.1% year/y.
Producer Price Index– Released 6/11/2020 – The Producer Price Index for final demand increased 0.4% in May. Core PPI was flat. Year over year the index for final demand declined 0.8%.
Consumer Price Index –Released 6/10/2020 – The Consumer Price Index declined 0.1% in May. Core CPI, which excludes food and energy also declined by 0.1%. The monthly changes left total CPI up 0.1% year-over-year and core CPI up 1.2%.
Consumer Credit–Released 6/5/2020 – Consumer credit increased at a seasonally adjusted annual rate of 19.5% in April. Revolving and nonrevolving credit decreased at annual rates of 65.0% and increased 4.0% respectively. Total Outstanding consumer credit is currently at $4.1333 trillion.
U.S. Trade Balance– Released 6/4/2020 – According to the U.S. Census Bureau of Economic Analysis the goods and services deficit increased in April by $7.1 billion to $42.3 billion. April exports were $151.3 billion, $38.9 billion less than March exports. April imports were $200.7 billion, $31.8 billion less than March imports. The goods and services deficit decreased $26.0 billion or 13.4% year-to-date, from the same period in 2019. Year – over – year exports and imports decreased $79.8 billion or 9.5% and decreased $105.8 billion or 10.2% respectively.
PMI Non-Manufacturing Index (ISM Services)– Released 6/3/2020 – Economic activity in the non-manufacturing sector contracted in May for the second consecutive month. ISM Non-Manufacturing registered 45.4 percent, which is 3.6 percentage points above the adjusted April reading of 41.8 percent.
PMI Manufacturing ISM Index – Released 6/1/2020 – May PMI increased 1.6% to 43.1% from April’s reading of 41.5%. The New Orders Index was up 4.7% from April’s reading of 27.1% to 31.8%. The Production Index registered 33.2%, up 5.7%.
U.S. Construction Spending– Released 6/1/2020 – Construction spending declined 2.9% in April measuring at a seasonally adjusted annual rate of $1,346.2 billion. The April figure is 3.0% above the April 2019 estimate. Private construction spending was 3.0% below the revised March estimate at $1,004.1 billion. Public construction spending was 2.5% below the revised March estimate at $342.1 billion.
Chicago PMI– Released 5/29/2020 – Chicago PMI declined 3.1 points decreasing to 32.3. This marks ten consecutive months in contraction and the lowest level since March 1982.
Consumer Confidence– Released 5/26/2020 – The Consumer confidence index increased slightly by 0.9% in May following a sharp decline in April. The Index now shows a reading of 86.6, up from 85.7 in April.
US Light Vehicle Sales – Released 2/28/2020 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 16.81 million units in January.
Next week we get data on Consumer Confidence, Chicago PMI, U.S. Construction Spending, the U.S. Trade Balance, the PMI Manufacturing ISM Index, and the June Jobs Report.
A big uptick in COVID-19 cases was too much for the buyers to handle this week. States that had been less affected are now having there highest daily new cases.
This graph shows daily cases of COVID-19 in the U.S. You can see this data @ John Hopkins Virus Tracker
In the last few days, we have reported daily highs in new coronavirus cases. There is also an acceleration of younger people getting infected. The EU was reportedly considering its own restrictions on U.S. travelers, banning them from entering when it relaxes its border restrictions on July 1. Texas, Florida, and California have scaled back reopening efforts. New unemployment claims didn’t help either as another 1.48 million people applied for insurance.
All the majors were down but value was hit the hardest, down over 4%. The underperformance, in value, is just a continuation of what’s happened so far this year. The difference between growth and value now stands at over 25%.
Table of Contents
Fixed Income
6/10/2020 Statement Federal Reserve Dot Plots US Debt Measurement US Corporate Debt Tops $6 Trillion Treasury.gov yields
FOMC Policy Normalization Statement
Global Bond Yields
Daily US Treasury Yields
Foreign Exchange Market
Energy Complex
The Baker Hughes rig count was down 1 this week. There are 265 oil and gas rigs operating in the US – down 702 over last year.
Metals Complex
Employment Picture
Weekly Unemployment Claims – Released Thursday 6/25/2020 – Initial jobless claims for the week ending June 20 decreased by 60,000 to 1.480 million. The 4-week moving average was 1.621 million declining by approximately 161k.
Job Openings & Labor Turnover Survey JOLTS – Released 6/9/2020 – The U.S. Bureau of Labor Statistics reported the number and rate of job openings declined to 5.0 million and 3.7% respectively, on the last business day of April. Over the month, hires declined to 3.5 million and separations decreased by 4.8 million to 9.9 million. Within separations, the quits rate declined to 1.4%. The layoffs and discharges rates decreased to 5.9%.
May Jobs Report – BLS Summary – Released 6/5/2020 – The US Economy gained 2.5 million nonfarm jobs in May and the Unemployment rate declined to 13.3%. Average hourly earnings fell by 29 cents. Hiring highlights include Leisure and Hospitality +1.24 million, Construction +464k, Education and Health Services +424k, Retail Trade +368k, and Manufacturing +225k.
Employment Cost Index – Released 4/30/2020 – Compensation costs for civilian workers increased 0.8% for the 3-month period ending in March 2020. The 12 month period ending on March 2020 saw compensation costs increase by 2.8%, same as the 12 month period ending March 2019. Wages and salaries increased 3.1 percent over the year and increased 2.9 percent for the 12-month period ending in March 2019. Benefit costs increased 2.1 percent for the 12-month period ending in March 2020. In March 2019, the increase was 2.6 percent. This report is published quarterly.
This Week’s Economic Data
Links take you to the data source
Personal Income – Released 6/26/2020 – Personal income decreased $874.2 billion or 4.2 percent in May according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) decreased $911.1 billion or 4.9 percent and personal consumption expenditures (PCE) increased $994.5 billion or 8.2 percent.
Third Estimate of 1st Quarter 2020 GDP – Released 6/25/2020 – Real gross domestic product (GDP) decreased at an annual rate of 5.0 percent in the first quarter of 2020, according to the third estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2019, real GDP increased 2.1 percent. This third GDP estimate is based on more complete source data than were available for the second and “advance” estimates issued prior. In the second estimate, the decrease in real GDP was also 5.0 percent. In the third estimate, an upward revision to nonresidential fixed investment was offset by downward revisions to private inventory investment, personal consumption expenditures (PCE), and exports. The decrease in real GDP in the first quarter reflected negative contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, and private inventory investment that were partly offset by positive contributions from residential fixed investment, federal government spending, and state and local government spending.
Durable Goods – Released 6/25/2020 – New orders for manufactured durable goods in May increased for the second consecutive month up $26.6 billion or 15.8% to $194.4 billion in May. Transportation equipment led the increase rising $20.9 billion or 80.7% to $46.9 billion.
New Residential Sales – Released 6/23/2020 – Sales of new single-family homes increased 16.6% to 676k, seasonally adjusted, in May. The median sales price of new homes sold in May was $317,900 with an average sales price of $368,800. At the end of May, the seasonally adjusted estimate of new homes for sale was 318k. This represents a supply of 5.6 months at the current sales rate.
Existing Home Sales – Released 6/22/2020 – Existing home sales declined for the third consecutive month in May. Sales declined 9.7% to a seasonally adjusted rate of 3.91 million in May. Sales are currently down 26.6% from one year ago. Housing inventory sits at 1.55 million units. Up 6.2% over last month. Down 18.8% over last year. Unsold inventory sits at a 4.8 month supply. The median existing home price for all housing types was $284,600.
Recent Economic Data
Links take you to the data source
Housing Starts – Released 6/17/2020 – New home starts in May were at a seasonally adjusted annual rate of 974k; up 4.3% above April but 23.2% below last May’s rate. Building Permits were at a seasonally adjusted annual rate of 1.220 million, up 14.4% compared to April but down 8.8% over last year.
Industrial Production and Capacity Utilization – Released 6/16/2020 – In May Industrial production increased 1.4%. The increase in industrial production is attributed to at least partial operations resuming in factories following the suspensions issued in response to Covid-19. Manufacturing increased 3.8%. Total industrial production was 92.6% of its 2012 average which is 15.3% lower in May than a year ago. Total capacity utilization increased 0.8% to 64.8% in May which is 15.0% below its long-run average.
Retail Sales – Released 6/16/2020 – U.S. retail sales for May increased 17.7% to $485.5 billion. U.S. retail sales are down 6.1% year/y.
Producer Price Index – Released 6/11/2020 – The Producer Price Index for final demand increased 0.4% in May. Core PPI was flat. Year over year the index for final demand declined 0.8%.
Consumer Price Index – Released 6/10/2020 – The Consumer Price Index declined 0.1% in May. Core CPI, which excludes food and energy also declined by 0.1%. The monthly changes left total CPI up 0.1% year-over-year and core CPI up 1.2%.
Consumer Credit – Released 6/5/2020 – Consumer credit increased at a seasonally adjusted annual rate of 19.5% in April. Revolving and nonrevolving credit decreased at annual rates of 65.0% and increased 4.0% respectively. Total Outstanding consumer credit is currently at $4.1333 trillion.
U.S. Trade Balance – Released 6/4/2020 – According to the U.S. Census Bureau of Economic Analysis the goods and services deficit increased in April by $7.1 billion to $42.3 billion. April exports were $151.3 billion, $38.9 billion less than March exports. April imports were $200.7 billion, $31.8 billion less than March imports. The goods and services deficit decreased $26.0 billion or 13.4% year-to-date, from the same period in 2019. Year – over – year exports and imports decreased $79.8 billion or 9.5% and decreased $105.8 billion or 10.2% respectively.
PMI Non-Manufacturing Index (ISM Services) – Released 6/3/2020 – Economic activity in the non-manufacturing sector contracted in May for the second consecutive month. ISM Non-Manufacturing registered 45.4 percent, which is 3.6 percentage points above the adjusted April reading of 41.8 percent.
PMI Manufacturing ISM Index – Released 6/1/2020 – May PMI increased 1.6% to 43.1% from April’s reading of 41.5%. The New Orders Index was up 4.7% from April’s reading of 27.1% to 31.8%. The Production Index registered 33.2%, up 5.7%.
U.S. Construction Spending – Released 6/1/2020 – Construction spending declined 2.9% in April measuring at a seasonally adjusted annual rate of $1,346.2 billion. The April figure is 3.0% above the April 2019 estimate. Private construction spending was 3.0% below the revised March estimate at $1,004.1 billion. Public construction spending was 2.5% below the revised March estimate at $342.1 billion.
Chicago PMI – Released 5/29/2020 – Chicago PMI declined 3.1 points decreasing to 32.3. This marks ten consecutive months in contraction and the lowest level since March 1982.
Consumer Confidence – Released 5/26/2020 – The Consumer confidence index increased slightly by 0.9% in May following a sharp decline in April. The Index now shows a reading of 86.6, up from 85.7 in April.
US Light Vehicle Sales – Released 2/28/2020 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 16.81 million units in January.
Next week we get data on Consumer Confidence, Chicago PMI, U.S. Construction Spending, the U.S. Trade Balance, the PMI Manufacturing ISM Index, and the June Jobs Report.
Data Sources:
Bureau of Economic Analysis (BEA)
Congressional Budget Office (CBO)
U.S. Bureau of Labor Statistics (BLS)
Federal Reserve Economic Data (FRED Charts)
CME Fed Watch
U.S. Treasury – Yields
U.S. Census Bureau
Institute for Supply Management (ISM)
Weekly DOL Employment Data
BLS Monthly Jobs Report
JOLTS
US Energy Admin (EIA)
BLS Consumer Price Index CPI
BLS Producer Price Index PPI
Atlanta Fed GDPNOW
NY Fed Nowcast GDP
US Census Bureau Housing Starts
Consumer Credit
USCB Retail Sales
Construction Spending
Federal Reserve Dot Plots
NY Empire Index
Philadelphia Federal Reserve
P/E Ratio Data -Yardeni Research
Technical Analysis Info:
StockCharts.com – Financial Charts
Exponential vs Simple moving average
Other Links:
1973 Arab Oil Embargo
Hunt Brothers Silver
Long-Term Capital bailout
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