Market Insights 6/11/2019

U.S. equities finished modestly lower, paring early gains and snapping a five-session winning streak.

Treasury yields were mostly higher amid some upbeat economic data, with wholesale price inflation remaining subdued and U.S. small business optimism unexpectedly improving. Elsewhere, the U.S. dollar and gold ticked lower, while crude oil prices inched higher.

The Markets…

The Dow Jones Industrial Average (DJIA) fell 14 points (0.1%) to 26,049,

The S&P 500 Index lost 1 point to 2,886, and

The Nasdaq Composite declined nearly a point to 7,823.

In moderate volume, 865 million shares were traded on the NYSE and 2.0 billion shares changed hands on the Nasdaq.

WTI crude oil inched $0.01 higher to $53.27 per barrel and wholesale gasoline was up $0.03 at $1.76 per gallon. Elsewhere,

The Bloomberg gold spot price fell $1.02 to $1,326.96 per ounce, and

The Dollar Index— a comparison of the U.S. dollar to six major world currencies—ticked 0.1% lower to 96.71.

Wholesale price inflation mixed, small business optimism unexpectedly rises

The Producer Price Index (PPI) showed prices at the wholesale level in May ticked 0.1% higher month-over-month, matching the Bloomberg forecast, and following April’s unrevised 0.2% rise. The core rate, which excludes food and energy, was up 0.2% m/m, in line with expectations, and after April’s unadjusted 0.1% increase. Y/Y, the headline rate was 1.8% higher, below projections of a 2.0% rise and compared to April’s unadjusted 2.2% increase. The core PPI rose 2.3% y/y last month, matching estimates and versus April’s unrevised 2.4% rise.

The National Federation of Independent Business (NFIB) Small Business Optimism Index for May rose to 105.0 from April’s unrevised 103.5 level, and versus expectations of a decrease to 102.0. The report noted that sales improved, the inventory soft spot seen in last month’s report rebounded, and profit trends posted a very solid advance. Also, job creation plans gained, hiring remained strong, and expectations for sales, business conditions, and credit conditions all improved.

Treasuries were mostly lower, as the yield on the 2-year note rose 3 basis points (bps) to 1.93% and the yield on the 10-year note ticked 1 bp higher to 2.15%, while the 30-year bond rate was little changed at 2.62%.

More inflation data is in store for tomorrow’s economic calendar in the form of the May Consumer Price Index (CPI), forecasted to show a 0.1% m/m increase, while the core rate, which excluded food and energy, is expected to have risen 0.2% m/m. The only other item on tomorrow’s docket is MBA Mortgage Applications.

Europe and Asia higher on cooled trade fears and China stimulus

European equities finished mostly higher, bolstered by cooled trade fears after the recent migration agreement that led to Mexico avoiding increased tariffs from the U.S., which continues to support the auto sector. However, the markets are looking to the G-20 meeting later this month to see if U.S. President Donald Trump will meet with Chinese President Xi.

In economic news, Eurozone investor confidence surprisingly declined in June and the U.K. employment change rose more than expected in April. The euro and the British pound were modestly higher versus the U.S. dollar, while bond yields in the region were mostly lower.

Stocks in Asia finished higher following the five-day rally in the U.S. that has come courtesy of increased Fed rate cut expectations and cooled trade concerns after increased tariffs on Mexico by the U.S. was averted. Also, the markets got some support from reports that suggested the possibility of further China stimulus efforts aimed at infrastructure projects.

Chinese equities jumped and those traded in Hong Kong were higher ahead of this week’s host of key economic data. Stocks in Japan rose, with the yen dipping late in the session, while Australian securities rallied in a return to action from yesterday’s holiday, and as the nation’s business confidence improved solidly for last month. Markets in India and South Korea also advanced