Stocks had strong gains Thursday and Friday as Congress moved to approve legislation to limit spending and suspend the debt ceiling until 2025. Major indices had substantial gains for the week with the small cap Russell 2000 and emerging markets posting the biggest gains.
Several FED members spoke this week and indicated a likelihood of the FED pausing in June but stressed this is not mean their won’t be more rate hikes later. The pause will give the FED more time to interpret incoming data. May had a surprisingly large increase in jobs but hourly earnings rose less than expected. Also, productivity fell in the first quarter and unit labor costs rose substantially providing a mixed picture on inflationary pressures.
Treasury bond yields fell with the 30-year bond yield at 3.891% and the 10-Year note at 3.706%. Freddie Mac reported that 30-year mortgage rates rose to 6.79%. Crude oil fell to $71.92 a barrel and natural gas fell to $2.181 per MMBTUs. The U.S. dollar index fell to 104.06 and gold rose to $1964.90 an ounce.
- The S&P CoreLogic National Home Price Index rose 1.26% in March.
- From a year ago the index has risen 0.66%, down from 2.1% increase in the prior month.
- The Eurozone reported inflation in May was 6.1% from a year ago, down from 7.0% in April. This was the lowest year over year reading in 15 months.
- Core prices, excluding volatile food and energy rose 5.3%, down from a peak of 5.7% in March.
- S&P Global released purchasing manager’s manufacturing indices for May. Keep in mind that anything over 50 represents expansion and under 50 represents contraction:
- U.S. manufacturing PMI fell from 50.2 in April to 48.4 in May.
- China manufacturing PMI rose from 49.5 to 50.9.
- Japan manufacturing PMI rose from 49.5 to 50.6.
- Eurozone manufacturing PMI fell from 45.8 to 44.8.
- Canada manufacturing PMI fell from 50.2 to 49.0.
- Mexico manufacturing PMI fell from 51.1 to 50.5.
- The Labor Department reported:
- Job openings increased to 10.1MM in April.
- Job openings increased to 10.1MM in April.
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- 339,000 jobs were created in May.
- Unemployment rose to 3.7% in May, up from 3.3% in April.
Source: Labor Department
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- Average hourly earnings rose 0.3% in May.
- Seasonally adjusted first-time claims for unemployment were 232,000 an increase of 2,000 from the previous week’s revised level 230,000.
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- The 4-week moving average of claims, designed to smooth out volatility, was 229,500 a decrease of 2500 from the revised level last week.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- Non-farm labor productivity fell 2.1% in the first quarter.
- Output increased 0.5%.
- Hours worked increased 2.6%.
- Unit labor costs increased 4.2%.
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- 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 fell from 12.3MM BPD to 12.2MM BPD.
- Natural gas storage rose 110BN cubic feet and is above the 5-year average at this time of year.
- Baker Hughes reported the number of active oil rigs fell 15 to 555. The number of active natural gas rigs was unchanged at 137.
Please call us if you have any questions.
Loren C. Rex, CFP®, MA Erik A Smith, AIF®
Founder / Emeritus President & C.E.O.
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.
Sources:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W
https://ir.eia.gov/ngs/ngs.html
https://www.freddiemac.com/pmms
https://www.wsj.com/market-data?mod=nav_top_subsection
https://bakerhughesrigcount.gcs-web.com/na-rig-count
https://fred.stlouisfed.org/series/JTSJOL
https://www.pmi.spglobal.com/public/release/pressreleases
https://www.bls.gov/news.release/prod2.nr0.htm
