Most major stock indices ended the week with modest gains, with only developed international stocks ending lower.  Stocks rallied on Wednesday and Thursday on optimism that lower gasoline prices may help bring down inflation.  However, inventories of crude oil and gasoline remain low and prices may head higher in the next couple of months.  On Friday, the June jobs report came in stronger than expected dousing hopes that inflation would come down soon.  Still stocks ended Friday little changed.

Treasury yields rose with the 30-year bond yield at 3.265% and the 10-Year note at 3.081%.  Mortgage rates were little changed with the 30-year mortgage rate ending at 5.84%.  U.S. crude oil fell to $104.69 a barrel and natural gas rose to $5.973 per MMBTUs.  The U.S. dollar index rose to 106.95.  Gold fell to $1740.20 an ounce.

In the economic numbers:

• IHS Markit released its services purchasing manager’s indices for June.  Keep in mind that anything over 50 represents expansion and under 50 represents contraction.
  • China’s PMI rose from 41.4 in to 54.5.
  • Eurozone’s (composite) PMI fell from 54.8 to 52.0.
  • Japan’s PMI fell from 52.6 to 54.0.
  • US’s PMI fell from 53.4 to 52.7.
• The  Commerce Department reported:
  • Factory orders rose 1.6% in May following a 0.5% increase in April.
  • The trade deficit shrank 1.3% in May following a decline in April. 
    • Imports rose 0.6% mainly on oil. 
      • Consumer goods imports fell 1.5% as consumers shift spending from goods to services.
    • Exports rose 1.2%, mainly on oil and natural gas.
• The Labor Department reported:
  • The U.S. added a net 372,000 jobs in June.
    • The unemployment rate remained at 3.6%.
    • May’s increase was revised down to 384,000 and April was revised down to 368,000.
    • Average hourly earnings rose 5.1% year over year.
    • The labor force participation rate was 62.2, down from 62.3 in May.

• • There were 11.3MM job openings in May, down from the upwardly revised 11.7MM in April.
    • Layoffs rose from 11.2MM to 11.4MM.
    • Quits fell slightly to 4.3MM.
  • Seasonally adjusted first time claims for unemployment rose to 235,000, up from 231,000 in the prior week. 
  • The 4-week moving average of claims, designed to smooth out volatility, rose to 232,500.
  • For the full unemployment report go here:  https://www.dol.gov/ui/data.pdf .
• The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf .  Also, the EIA reported in the prior week:
  • Field production of crude oil 12.1MM BPD.
  • Natural gas storage rose 60BN cubic feet and is below the 5-year average at this time of year.
• Baker Hughes reported the number of active oil rigs rose 2 to 597.  The number of active natural gas was unchanged at 153.

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

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 These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.  The Indices mentioned are unmanaged and cannot be invested into directly.