Major stock indices ended the week modestly higher with the small cap Russell 2000 posting the largest gain. Despite large treasury bond sales after the lifting of the debt limit, treasury yields were mixed.
OPEC+ met and held production targets but Saudi Arabia announced it would voluntarily cut its production by 1MM barrels per day. OPEC also called on Russia to be more transparent in its production as it is believed that Russia has exceeded its production targets.
Canada’s central bank met and, after pausing since January, raised the benchmark short term interest rate 0.25% to 4.75%. The bank’s statement said, “Overall, excess demand in the economy looks to be more persistent than anticipated.” The bank did not give much guidance on further rate moves.
The Federal Reserve meets on June 13th & 14th and has been widely expected to not hike rates at this meeting.
Treasury bond yields were mixed with the 30-year bond yield at 3.882% and the 10-Year note at 3.737%. Freddie Mac reported that 30-year mortgage rates fell to 6.71%. Crude oil fell to $70.38 a barrel and natural gas rose to $2.262 per MMBTUs. The U.S. dollar index fell to 103.56 and gold rose to $1975.30 an ounce.
- China reported:
- Consumer prices in May were only 0.2% above a year ago.
- Producer prices fell 4.6% from last May.
- Canada reported losing 17,300 jobs in May while unemployment rose to 5.2%.
- This follows eight months of gains.
- The World Bank forecast that the global economy would only grow 2.1% in 2023, down from 3.1% in 2022.
- For 2024 the World Bank forecast that the global economy will grow 2.4%.
- By the end of 2024 a third of developing countries will not meet the per capita income they achieved in 2019.
- S&P Global released purchasing manager’s services indices for May. Keep in mind that anything over 50 represents expansion and under 50 represents contraction:
- U.S. services PMI rose from 53.6 in April to 54.9 in May.
- China services PMI rose from 56.4 to 57.1.
- Japan services PMI rose from 55.4 to 55.9.
- Eurozone services PMI fell from 56.2 to 55.1.
- The Federal Reserve reported that consumer credit rose a seasonally adjusted annual rate of 5.7% in April.
- Revolving credit, such as credit cards, rose at an annual rate of 13.1%.
- Non-revolving credit rose at an annual rate of 3.2%.
- The Commerce Department reported that the U.S. trade deficit rose 23% in April as imports rose and exports fell.
- The Labor Department reported:
- Seasonally adjusted first-time claims for unemployment were 261,000 an increase of 28,000 from the previous week’s revised level 233,000.
- This is the highest level of initial claims since October 30, 2021
- Seasonally adjusted first-time claims for unemployment were 261,000 an increase of 28,000 from the previous week’s revised level 233,000.
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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 .
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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 rose from 12.2MM BPD to 12.4MM BPD.
- Natural gas storage rose 104BN cubic feet and is above the 5-year average at this time of year.
- Baker Hughes reported the number of active oil rigs rose 1 to 556. The number of active natural gas rigs fell 2 to 136.
- The Department of Energy reported that it has purchased 3MM barrels of crude oil to begin restocking the Strategic Petroleum Reserve at $73 a barrel.
- Last year the DOE sold 180MM barrels at $95.
- The goal is to repurchase 60MM barrels.
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://www.pmi.spglobal.com/public/release/pressreleases
https://openknowledge.worldbank.org/bitstreams/2106db86-a217-4f8f-81f2-7397feb83c1f/download
https://www.bea.gov/news/2023/us-international-trade-goods-and-services-april-2023
