First quarter GDP was down 5.0% – April and May was the heart of the lockdown so we would expect the 2nd quarter to be significant (4th Q 2019 GDP increased 2.1 percent.) The first estimate of 2nd quarter GDP comes out July 30th. The Atlanta Feds’ GDPNow model is forecasting a 35% decrease. Gold had its first weekly close above $1800 since September of 2011.
The Baker Hughes rig count was down 5 this week. There are 258 oil and gas rigs operating in the US – down 700 over last year.
Brent Crude Oil rose 7.07% this week closing at $46.19/bbl
WTI Crude Oil fell 0.25% this week to close at $40.55/bbl
Heating Oil rose 0.82% this week closing at $1.241/gallon
Natural Gas gained 4.09% this week closing at $1.805 per million BTUs
Unleaded Gas rose 1.90% this week closing at $1.283/gallon
Metals Complex
Gold had its first weekly close above $1800 since September of 2011
Gold gained 0.66% this week closing at $1801.9/oz
Silver rose 3.99% on the week closing at $19.05/oz
Palladium gained 3.47% this week closing at $1994.40/oz
Platinum added 1.72% this week closing at $845.90/oz
Copper gained 5.42% this week closing at $2.898/lb
Employment Picture
Weekly Unemployment Claims – Released Thursday 7/9/2020 – Initial jobless claims for the week ending June 27 decreased by 99k to 1.314 million. The 4-week moving average was 1.437 million, a decrease of 63k.
Job Openings & Labor Turnover Survey JOLTS – Released 7/7/2020 – The U.S. Bureau of Labor Statistics reported the number and rate of job openings increased by 5.4 million or 3.9% on the last business day of May. Over the month, hires increased by 2.4 million to 6.5 million and separations decreased by 5.8 million to 4.1 million. Within separations, the quits rate increased to 1.6%. The layoffs and discharges rates decreased to 1.4%.
June Jobs Report – BLS Summary– Released 7/2/2020 – The US Economygained 4.8 million nonfarm jobs in June and the Unemployment rate declined to 11.1%. Average hourly earnings fell by 35 cents. Hiring highlights include Leisure and Hospitality +2.088 million, Manufacturing +356k, Education and Health Services +568k, Retail Trade +740k, and Professional and Business Services 306k.
Average hourly earnings declined by 35 cents in May to $29.37.
U3 unemployment rate declined to 11.1%. U6 unemployment rate declined to 18.0%.
The labor force participation rate increased by 0.7% to 61.5%.
Average work week decreased by 0.2 hours to 34.5 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
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Producer Price Index– Released 7/10/2020 – The Producer Price Index for final demand decreased 0.2% in May.
Consumer Credit–Released 7/8/2020 – In May, consumer credit decreased by $18.2 billion, at a seasonally adjusted rate of 5.25%. Revolving credit decreased at an annual rate of 28-1/2 percent, while nonrevolving credit increased at an annual rate of 2-1/4 percent. Total Outstanding consumer credit is currently at $4.112 trillion.
PMI Non-Manufacturing Index (ISM Services)– Released 7/6/2020 – Economic activity in the non-manufacturing sector grew in June following two consecutive months of contraction. ISM Non-Manufacturing registered 57.1 percent, which is 11.7 percentage points above the adjusted May reading of 45.4 percent.
Recent Economic Data
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US Light Vehicle Sales – Released 7/03/2020 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 13.14 million units in June.
U.S. Trade Balance–Released 7/2/2020 – According to the U.S. Census Bureau of Economic Analysis the goods and services deficit increased in May by $4.8 billion to $54.6 billion. May exports were $144.5 billion, $6.6 billion less than April exports. May imports were $199.1 billion, $1.8 billion less than April imports. The goods and services deficit decreased $22.3 billion or 9.1% year-to-date, from the same period in 2019. Year – over – year exports and imports decreased $148.3 billion or 14.0% and decreased $170.6 billion or 13.1% respectively.
PMI Manufacturing ISM Index – Released 7/1/2020 – June PMI increased 9.5% to 52.6% from May’s reading of 43.1%. The New Orders Index was up 24.6% from May’s reading of 31.8% to 56.4%. The Production Index registered 57.3%, up 24.1%.
U.S. Construction Spending– Released 7/1/2020 – Construction spending declined 2.1% in May measuring at a seasonally adjusted annual rate of $1,356.4 billion. The May figure is 0.3% above the May 2019 estimate. Private construction spending was 3.3% below the revised April estimate at $1,001.2 billion. Public construction spending was 1.2% above the revised April estimate at $355.2 billion.
Chicago PMI– Released 6/30/2020 – Chicago PMI increased 1.8 points increasing to 36.6. This marks eleven consecutive months in contraction. The increase in June comes as Covid-19 related shutdowns have eased resulting in increased business activity. Of the five indicators Production and New Orders saw the largest gains and Supplier Deliveries and Employment declined.
Consumer Confidence– Released 6/30/2020 – The Consumer confidence index increased 12.2% in June following a negligible change in May. The Index now shows a reading of 98.1, up from 85.9 in May.
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 GoodsReleased 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.
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.
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%.
Next week we get data on CPI, Retail Sales, Housing Starts, and Industrial Production and Capacity Utilization.
First quarter GDP was down 5.0% – April and May was the heart of the lockdown so we would expect the 2nd quarter to be significant (4th Q 2019 GDP increased 2.1 percent.) The first estimate of 2nd quarter GDP comes out July 30th. The Atlanta Feds’ GDPNow model is forecasting a 35% decrease. Gold had its first weekly close above $1800 since September of 2011.
Table of Contents
Fixed Income
June FOMC Meeting Minutes 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 5 this week. There are 258 oil and gas rigs operating in the US – down 700 over last year.
Metals Complex
Gold had its first weekly close above $1800 since September of 2011
Employment Picture
Weekly Unemployment Claims – Released Thursday 7/9/2020 – Initial jobless claims for the week ending June 27 decreased by 99k to 1.314 million. The 4-week moving average was 1.437 million, a decrease of 63k.
Job Openings & Labor Turnover Survey JOLTS – Released 7/7/2020 – The U.S. Bureau of Labor Statistics reported the number and rate of job openings increased by 5.4 million or 3.9% on the last business day of May. Over the month, hires increased by 2.4 million to 6.5 million and separations decreased by 5.8 million to 4.1 million. Within separations, the quits rate increased to 1.6%. The layoffs and discharges rates decreased to 1.4%.
June Jobs Report – BLS Summary – Released 7/2/2020 – The US Economy gained 4.8 million nonfarm jobs in June and the Unemployment rate declined to 11.1%. Average hourly earnings fell by 35 cents. Hiring highlights include Leisure and Hospitality +2.088 million, Manufacturing +356k, Education and Health Services +568k, Retail Trade +740k, and Professional and Business Services 306k.
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
Producer Price Index – Released 7/10/2020 – The Producer Price Index for final demand decreased 0.2% in May.
Consumer Credit – Released 7/8/2020 – In May, consumer credit decreased by $18.2 billion, at a seasonally adjusted rate of 5.25%. Revolving credit decreased at an annual rate of 28-1/2 percent, while nonrevolving credit increased at an annual rate of 2-1/4 percent. Total Outstanding consumer credit is currently at $4.112 trillion.
PMI Non-Manufacturing Index (ISM Services) – Released 7/6/2020 – Economic activity in the non-manufacturing sector grew in June following two consecutive months of contraction. ISM Non-Manufacturing registered 57.1 percent, which is 11.7 percentage points above the adjusted May reading of 45.4 percent.
Recent Economic Data
Links take you to the data source
US Light Vehicle Sales – Released 7/03/2020 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 13.14 million units in June.
U.S. Trade Balance – Released 7/2/2020 – According to the U.S. Census Bureau of Economic Analysis the goods and services deficit increased in May by $4.8 billion to $54.6 billion. May exports were $144.5 billion, $6.6 billion less than April exports. May imports were $199.1 billion, $1.8 billion less than April imports. The goods and services deficit decreased $22.3 billion or 9.1% year-to-date, from the same period in 2019. Year – over – year exports and imports decreased $148.3 billion or 14.0% and decreased $170.6 billion or 13.1% respectively.
PMI Manufacturing ISM Index – Released 7/1/2020 – June PMI increased 9.5% to 52.6% from May’s reading of 43.1%. The New Orders Index was up 24.6% from May’s reading of 31.8% to 56.4%. The Production Index registered 57.3%, up 24.1%.
U.S. Construction Spending – Released 7/1/2020 – Construction spending declined 2.1% in May measuring at a seasonally adjusted annual rate of $1,356.4 billion. The May figure is 0.3% above the May 2019 estimate. Private construction spending was 3.3% below the revised April estimate at $1,001.2 billion. Public construction spending was 1.2% above the revised April estimate at $355.2 billion.
Chicago PMI – Released 6/30/2020 – Chicago PMI increased 1.8 points increasing to 36.6. This marks eleven consecutive months in contraction. The increase in June comes as Covid-19 related shutdowns have eased resulting in increased business activity. Of the five indicators Production and New Orders saw the largest gains and Supplier Deliveries and Employment declined.
Consumer Confidence – Released 6/30/2020 – The Consumer confidence index increased 12.2% in June following a negligible change in May. The Index now shows a reading of 98.1, up from 85.9 in May.
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.
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.
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%.
Next week we get data on CPI, Retail Sales, Housing Starts, and Industrial Production and Capacity Utilization.
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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