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Dow Reaches New Record As Job Openings Tumble

Equities Continue to Echo Shifting Risk Sentiment Despite Tumbling Fundamentals

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Although the American labor market remains fragile as evidenced by the latest job openings data released by the Bureau of Labor Statistics, stocks pushed higher throughout the session, seeing the Dow Jones Industrial Average touching new highs for the first time since 2015.

Mixed Labor Fundamentals


Even with a revision higher in the prior months figure, the JOLT’s job openings survey for the month of May showed a deep slide in the number of jobs available for potential hires, with the figure crashing from 5.845 million openings during April to just 5.500 million, missing estimates of 5.700 million. As one of the most carefully watched indicators by the Federal Reserve, this plunge in labor market fundamentals matched the previous month’s nonfarm payroll print which largely disappointed markets.  However, should June experience a rebound in the figure, it could help to point to a more solid foundation for the labor economy.  Reflecting this more positive sentiment, the Federal Reserve is appearing more hawkish in its outlook as regional Fed Presidents talk up higher rates.  Stocks remain undeterred by talk of normalization, with the Dow Jones Industrial Average reaching a new intraday record before retreating modestly.

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Japanese Officials Deny Contemplating Helicopter Money


The meeting between top Japanese officials and former Federal Reserve Chairman Ben Bernanke has raised speculation that the idea of helicopter money is being assessed in the highest echelons of government as policymakers determine how to jumpstart inflation in the nation.  However, denials earlier from Abe’s Cabinet Secretary Yoshihide Suga dismissed the idea as untrue and not the proposed path for stimulus measures, sending the Yen climbing once more versus peers after weakening for two sessions. Although Bernanke has discussed the merits of this particular strategy in the past as a means to spur inflation and exit a deflationary wave, it remains a theoretical approach that has not yet been put into practice due to the perceived outlandishness.  In spite of gains in the Yen, Japanese shares continued to climb, with the Nikkei 225 rising by 0.84%.

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OPEC Forecasts Higher Oil Demand in 2017


For its earliest estimates on oil demand for 2017, OPEC anticipates that the ongoing mismatch between supply and demand will be significantly diminished as a surplus created by overproduction gradually wanes.  According to the report, OPEC forecasts demand will rise by 1.200 million barrels per day in 2017, rising to a total of 95.300 million barrels per day globally.  However, this outlook comes amid output reaching towards record levels for certain members, hurting the case for demand to soak up rising supply.  While America and Mexico are forecast to see production decline, this is expected to be offset by rising output from Canada and Brazil.  In the meantime, oil inventories are once again on the rise according to figures released yesterday by the American Petroleum Institute, reporting a 2.200 million barrel build.  Brent prices surged after the number, climbing nearly $2.00 per barrel before pulling back towards $47.94.

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UK Government Transitions, Paving the Way Towards Brexit


With Prime Minister David Cameron set to resign today during his meeting with the Queen, it is up to incoming Prime Minister Theresa May to shortly announce her pick to lead the negotiations surrounding an exit move.  After adding significant volatility to financial markets, the “Brexit” vote now requires the next government to trigger Article 50 of the Lisbon Treaty, paving the way for an exit.  With European Union members urging a quick exit, the new Prime Minister will find herself under immense pressure to reach a conclusion to this process swiftly.  Meanwhile, expectations are high that the Bank of England may decide to slash interest rates tomorrow during the upcoming Monetary Policy Committee decision.  FTSE 100 futures are slightly on the retreat this morning after climbing to the highest levels since August of 2015.

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