Highlights of the Fed’s anecdotal report on the economy:
- Beige book from early April to late May
- Several Districts cited the positive effects on the economy of increased vaccination rates and relaxed social distancing measures, while they also noted the adverse impacts of supply chain disruptions
- Selling prices increased moderately, while input costs rose more briskly.
- Contacts expected that labor demand will remain strong, but supply constrained, in the months ahead
- Overall, wage growth was moderate, and a growing number of firms offered signing bonuses and increased starting wages to attract and retain workers
- Overall, expectations changed little, with contacts optimistic that economic growth will remain solid.
- Full report
Here is the full commentary on prices:
On balance, overall price pressures increased further since the last report. Selling prices increased moderately, while input costs rose more briskly. Input costs have continued to increase across the board, with many contacts noting sharp increases in construction and manufacturing raw materials prices. Increases were also noted in freight, packaging, and petrochemicals prices. Contacts reported that continuing supply chain disruptions intensified cost pressures. Strengthening demand, however, allowed some businesses, particularly manufacturers, builders, and transportation companies, to pass through much of the cost increases to their customers. Looking forward, contacts anticipate facing cost increases and charging higher prices in coming months.
That’s certainly inflationary.
It’s tough to read any of this though and believe that it changes Fed thinking. They expect a flood of workers to come back and that supply bottlenecks will eventually ease. There’s some pricing pressure now but they don’t believe it will be persistent. If we’re still seeing this kind of commentary in 5 months, that will be a different story.
German DAX closes at a new record high
The European shares are ending the day mostly higher. Spain’s Ibex is the exception.
The provisional closes are showing:
- German DAX, +0.2% (a new record close)
- France’s CAC, +0.5%
- UK’s FTSE 100, +0.4%
- Spain’s Ibex, -0.2%
- Italy’s FTSE MIB, +0.2%.
In other markets as London/European traders look to exit:
- Gold is up $5.70 or 0.3% at $1906.12
- Silver is up $0.18 or 0.67% $28.08.
- WTI crude oil futures are up $0.76 or 1.12% at $68.48
- Bitcoin is up $1700 or 4.68% at $38,034
In the US stock market, the major indices are higher. The Dow is working on its fifth straight day to the upside. The S&P is up for the last five trading days. The Nasdaq is trading near its highs for the day:
- S&P index +14.2 to points or 0.34% at 4216.33
- NASDAQ index up 37.11 points or 0.28% at 13773.50
- Dow up 93 points or 0.27% at 34668
In the US treasury market, yields are lower with the tenure yield down around 1.9 basis points.
Major currencies are keeping steadier after a bit of a middling day yesterday where the dollar stormed back following early weakness, with equities also paring their early advance with US stocks ending up near little changed on the day.
The market seems to still be struggling for direction in general and will have to wait further on more clues with regards to the inflation debate.
That sets up a lot more expectations or at least some anticipation that Friday’s US job numbers will at least provide some catalyst for a short-term move at least.
Oil remains a standout performer as it knocks on the door of a push above $68 after having traded to its highest levels since 2018 yesterday. For now, the $68 is still limiting gains but is one to watch through the remainder of the week.
0600 GMT – Germany April retail sales data
Prior release can be found here. After the bump in March, retail sales activity is expected to moderate in April. Base effects will ensure a strong year-on-year reading but with tighter restrictions still in place during April, consumption had been affected though at least the outlook towards 2H 2021 remains optimistic.
0830 GMT – UK April mortgage approvals, credit data
Prior release can be found here. Mortgage activity is expected to keep robust amid the strong UK housing market while credit conditions are still estimated to be more subdued and will take some time before turning around.
Nasdaq modestly lower. Dow higher
It is a mixed market in the US equities today.
- The Dow close higher for the fourth consecutive day
- The S&P index snapped its three day winning streak and closes near session lows. The index got within four points of its all-time intraday high
- The Nasdaq close lower
- energy sector closes 4% higher
- Russell 2000 up three of the last four trading days
The final numbers are showing:
- S&P index fell -2.05 points or -0.05% at 4202.05
- Nasdaq index fell -12.26 points or -0.09% at 13736.48
- Dow rose 46.25 points or +0.13% at 34575.70.
- Russell 2000 index rose 25.77 points or 1.14% at 2294.74
Big winners today included some of the typical meme stocks:
- AMC, +22.47%. Shares are up 1400% since the beginning of the year. They raised $230 million of capital.
- Blackberry +14.7%
- GameStop, +11.89%
- Nio, +9.68%
- Koss, +4.33%
Other winners included:
- Schlumberger, +5.46%
- Tencent, +3.53%
- Roblox, +3.33%
- Corsair, +3.17%
- Boeing, +3.12%
- Box, +2.87%
- Goldman Sachs, +2.8%
- AirBnB, +2.73%
Looking at the Dow30, the top 5 winners are:
- Boeing, +3.12%
- Goldman Sachs, +2.8%
- Chevron, +2.75%
- American Express, +2.24%
- Bank of America, +1.25%
The top five losers are:
- J&J, -2.29%
- Amgen, -1.86%
- Procter & Gamble, -1.5%
- Nike, +1.44%
- UnitedHealth, -1.25%