Blog Post

Markets Up Slightly While Stimulus Talks Remain Stalled

Most broad stock indexes ended the week slightly higher with the exception of the small cap Russell 2000.  Both the White House and Democrats remain far apart on stimulus negotiations.  Democrats have cut their original $3.5TN by 1/3 but want to retain $1TN for state and local governments with White House negotiators not willing to spend more than $150BN on state and local governments.  It’s likely that there will be no major progress until after the Democratic and Republican conventions in the next two weeks. 

Treasury yields rose sharply with the 30-year bond yield at 1.448% and the 10-Year note at 0.709%.  Crude oil rose to $42.23 a barrel and natural gas rose to $2.345 per MMBTUs.  The U.S. dollar index ended the week lower at 93.10 and gold prices retreated to $1953.70 an ounce.

In the economic numbers this week:

  • The U.K. reported its gross domestic product fell 20.4% in the second quarter, more than any other developed country and more than twice as much as the U.S.
  • China reported for July:
    • The consumer price index rose 2.7% from a year ago.
    • Producer prices fell 2.4% from a year ago, less than the 3% decline in June.
    • Industrial output was 4.8% higher than a year earlier.
    • Retail sales were down 1.1% from a year ago.
  • The Federal Reserve reported that industrial production rose a seasonally adjusted 3% in the month of July.  However, from July of last year, industrial production is down 8.2%.  Manufacturing rose 3.4% mainly due to a 28.3% increase in automobiles and parts.  Utility production rose 3.3% due to increased power for air conditioning.  Mining, including oil and gas production rose 0.8%.
  • The Commerce Department reported retail sales rose 1.2% in July for the third straight monthly increase.
  • The Labor Department reported:
    • 963,000 workers filed initial unemployment claims last week, the first week since March with initial claims below 1MM.  However, this is above the pre-pandemic record of 695,0000.
    • Continuing claims dropped to 15.5MM, down from a peak of nearly 25MM on May 9th.
    • Producer prices rose 0.6% in July up from 0.1% in June.
    • Consumer prices rose 0.6% in July following a 0.6% increase in June.  Excluding volatile food and energy, prices rose 0.6%.  A 5.6% increase in gasoline prices was offset by a 0.4% decrease in food prices.  June consumer prices rose 0.6% following three months of declines.
  • The EIA weekly oil report is here wpsrsummary .  Also, the EIA reported in the past week:
    • Field production of crude oil fell to 10.8MM barrels per day down from 11.0MM barrels in the prior week.
    • Natural gas storage rose by 58BN cubic feet and is above the highest level at this time of year during the past five years.
  • Baker Hughes reported the number of active oil rigs fell 4 to 172.  The number of active natural gas rigs rose 1 to 70.


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Loren C. Rex, CFP®, AIF®, MA                                                    Erik A Smith AIF®

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