Stock indices declined this holiday shortened week as concerns about slowing growth and the FED’s upcoming taper in bond purchases weighed on stocks.
The IHS Markit purchasing managers indices for August showed a slower rate of growth in both manufacturing and services across the world as the Delta variant impacts global economies. China slipped into contraction in August for both manufacturing and services.
The European Central Bank met and announced it would moderately reduce it’s $2.2TN bond buying program due to robust economic growth and increased inflation.
In the U.S., wholesale inflation hit 8.3% from a year ago as supply chain bottlenecks increased production costs.
Treasury yields were mixed with the 30-year bond yield closing at 1.930% and the 10-Year note closing at 1.332%. Crude oil rose to $69.56 a barrel and natural gas rose to $4.963 per MMBTUs. The U.S. dollar index rose to 92.62 and gold fell to $1789.90 an ounce.
In the economic numbers:
- IHS Markit released the following purchasing managers indices for August. Keep in mind that anything over 50 represents expansion and anything under 50 represents contraction.
- China manufacturing PMI fell from 50.3 in July to 49.2 in August.
- China services PMI fell from 54.9 in July to 46.7 in August.
- US manufacturing PMI fell from 63.4 in July to 61.1 in August.
- US services PMI fell from 59.9 in July to 55.1 in August.
- Japan manufacturing PMI fell from 53.0 in July to 52.7 in August.
- Japan services PMI fell from 47.4 in July to 42.9 in August.
- Eurozone manufacturing PMI fell from 62.8 in July to 61.4 in August.
- Eurozone composite PMI fell from 60.2 in July to 59.5 in August.
- China reported:
- Exports accelerated in August and have risen 25.6% from a year earlier up from 19.3% year over year in July.
- Producer prices rose 9.5% in August from a year earlier mainly due to higher commodity prices.
- Consumer prices rose only 0.8% from a year earlier as food prices fell following a pork shortage last year due to the African Swine Fever. Travel prices also fell as China added new restrictions to control the spread of the Delta variant.
- The Labor Department reported:
- A record 10.9 million job openings were unfilled at the end of July, greater than the 8.7 million unemployed Americans. 6.67 million jobs were filled in July down from 6.83 million in June.
- The producer price index rose 0.7% in the month August and 8.3% from a year earlier.
- A seasonally adjusted 310,000 workers filed initial claims for unemployment in the week ending September 4th, down 35,000 from a revised 345,000 the week before. This was a new pandemic low.
- The 4-week moving average of claims, designed to smooth out volatility, fell to 339,500.
- Continuing claims were at 2.8MM in the week ending August 28th.
- A broader measure of claims including extended benefits, pandemic assistance and other programs were about 12.0MM in the week ended August 21st.
- 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 fell from 11.5MMBPD to 10.0MMBPD as hurricane IDA interrupted production in the Gulf of Mexico.
- Natural gas storage rose 52BN cubic feet and is below the 5 year average at this time of year.
- Baker Hughes reported the number of active oil rigs fell 16 to 394 due to hurricane Ida. The number of active natural gas rigs rose 5 to 102.
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