DOW + 26 = 16,743
SPX + 1 = 1924
NAS – 5 = 4237
10 YR YLD + .07 = 2.53%
OIL – .31 = 102.40
GOLD – 7.80 = 1244.50
SILV – .05 = 18.86
The ISM got it wrong this morning. The Institute for Supply Management reported its May manufacturing index came in at a weaker than expected 53.2, but there was a software problem that didn’t properly reflect season adjustments; the ISM issued a revision; the May index was 56.0; but for some reason, that wasn’t correct, so they issued another revision. The May manufacturing index was 55.4; that’s the number and they’re sticking with it. Embarrassing? Yes.
Meanwhile, stocks and bonds were all over the board. Stocks fell into negative territory early on, but bounced back as revisions were issued. Bonds are hyper sensitive to economic growth, and the yield on the 10 year note moved higher and stayed higher, despite the initial numbers and the revisions. And if you look past the revisions, and you should, because it appears to be nothing more than an honest mistake, caught quick and corrected; the bottom line is a pretty strong number for manufacturing, more or less in line with the idea of a second quarter bounce in the economy. Â
The bigger story this week will be the jobs report on Friday. It is widely expected the economy added about 200,000 to 215,000 jobs in May, which would be down from a very strong report of 288,000 net new jobs in April. The unemployment rate is expected to tick up from 6.3% to 6.4% as more people enter the labor force.
We also expect some big economic news out of Europe this week, and we’re likely to see a small announcement instead. You will recall that European Central Bank President Mario Draghi announced back in the summer of 2012 that he would do “whatever it takes†to save the euro. And then he spent the following two years doing nothing. This week he’s expected to actually do something, specifically he’s expected to unveil a package of measures to fight deflation. Analysts expect the ECB to cut both its main interest rate and reduce its deposit rate to below zero, meaning the central bank would charge lenders to hold money with it overnight. Although any reduction will be modest, a negative deposit rate has never been introduced by a major central bank; and the thinking goes, this will force the banks to start lending.
