Daimler Trade Warning Spooks Markets

Jobless Claims Remain Low  

A light day of key economic data releases was highlighted by a report from the Labor Department that showed initial jobless claims in the US holding near historically low levels amid the backdrop of a strong economy and tight labor market.  The number of new claims for the week ended June 16th decreased 3,000 to a seasonally adjusted 218,000 (220,000 expected).  The four-week moving average of claims fell by 4,000 to 221,000 remaining near 50 year lows.  Also detailed in the report, the number of continuing claims increased by 12,000 to 1.723 million for the week ended June 9th.

 

Stress Test Results, Part 1

For the fourth consecutive year, all of the banks subject to the Fed’s stress test (over $100 billion in assets) have been found to have enough capital to withstand the various crisis scenarios the Fed measures.  According to the report, commercial loan and credit card assets showed the most stress under a scenario where unemployment hit 10% and corporate and real estate lending was significantly impaired.  The real measure of bank’s stocks will come next week, when the plans to return capital are announced and buyback programs and bank dividends are approved and announced.

Trade Concerns Hit Stocks 

Trade Tension again weighed on the markets as Daimler AG warned that current trade tensions could impact profits.  Equity Markets felt the heat, with all three major indices down on the day.  The NASDAQ led the way lower losing 0.88% followed by the DJIA giving up 0.80% and finally the S&P fell 0.63%.  Risk free assets were a popular buy today with Treasuries rallying throughout the day — yields on treasuries across the curve were off 3-4 bps with the 10-year closing at a yield of 2.90%.  In foreign exchange markets, the US Dollar (USD) lost 0.4% vs the Euro (EUR) and 0.6% vs the Pound (GBP).  As the dollar fell, crude oil futures followed losing 0.7% to close at $65.75/barrel.