DIA +.16%, SPY +.19%, QQQQ +.32%
10-Year Treasury -2/32, yielding 4.12%
Oil +47 cents to $55.57/bbl
Dollar -.8% versus Euro and -.2% versus Yen
Oil’s price spike above $56/bbl largely caused this morning’s sell-off. However, stocks rebounded as oil fell from its daily highs. Also encouraging the markets was the surprisingly low core CPI increase of .1%. Overall CPI was down .1%. However, oil has increased in price since this figure was tabulated, indicating a higher CPI number is likely next month. The NYSE advance/decline number was 19-12 while the NASDAQ’s was 16-13. Technically, the markets are treading water. The NASDAQ has sold-off from its May rally, and the DOW and S&P are still trading in a fairly thin range. This indicates traders are evenly split regarding future price direction.
The 10-Year Treasury ended down 2/32, yielding 4.12%. Part of today’s drop was a continuation of the technical sell-off in the markets. The 10-Year is still technically overbought, although it is in better shape than in the last month. The market sold-off to a larger loss earlier in the day after the NY manufacturing index rebounded from last months sharp decline. In addition, the Fed released its Beige Book, which reported the US economy is on firm footing.
Oil increased 47 cents to close at $55.57/bbl. The Department of Energy reported oil inventories decreased 1.8 million barrels last week, although inventories are still higher than last years level. Refineries are also operating at 96.7% capacity which gives very little room for any problems. Finally, OPEC announced an increase in their production ceiling. However, this increase of 500,000 largely confirmed the levels where most OPEC producers are already producing rather than a meaningful increase.
The dollar lost .8% versus the Euro and .2% versus the Yen. The US’ structural imbalances returned to the forefront of trader’s perception today, as the Treasury announced net capital inflows were 47 billion last month. This is the second consecutive month where foreign purchases have been too low to support the US’ trade deficit.