Advanced Share Registry : Market News 3 June 2021

The dull-sounding Beige Book Report from the Fed managed to hold the spotlight on a day of light news and little action day for U.S. markets. Its information is accumulated by the Fed's twelve regional banks eight times a year and stated the economy and prices expanded moderately in the first quarter of 2018. Phew, exciting stuff and the markets knew it with the major indices all up 0.1% after the Dow recalled 100 points off its intraday high. Ten-year Treasury yields were 2.2 basis points lower to 1.591% while inflationary oil hit new two-year highs, helping golds 0.3% lift.

The Beige report stated what everyone knows; that demand is improving faster than supply, increasing prices and wages, which will trend further up if shortages persist. To date, these pressures have been given short shrift by the Fed as transitory inflation due to supply-chain bottlenecks and the reopening of service industries. However, retail giant Costco CFO Richard Galanti didn't hold back in an earnings-call that was far from beige.

'Inflationary factors abound. These include higher labour costs, higher freight costs, higher transportation demand, along with the container shortage and port delays, increased demand in various product categories, various shortages of everything from chips to oils and chemical supplies by facilities hit by the Gulf freeze and storms and, in some cases, higher commodity prices. he also added 'Chip's shortages are impacting many items from an inflation standpoint, some items more than others. And with regard to containers and shipping, transportation costs have increased as well. This will continue - the feeling is that this will continue for the most part of this calendar year.'

The rate of vaccinations is encouraging the outlook for the U.S. even further as the seven-day average for new cases in the U.S. is 45% lower in the last fortnight, pulling deaths down 44% and hospitalizations off 22%. That's bumped up inflation for the leisure and hospitality industries which are on the edge of a boom. New York, hotel occupancy cracked over 50% for the first time since the pandemic broke out while suppliers across the board can't curtail costlier input prices, supply chain interruptions, and a lack of workers.

Fed, directors are still talking about talking about curtailing monetary policy support as Patrick Harker, president of the Philadelphia Fed and Vice Chair Richard Clarida, said these discussions should commence ASAP.

However, there has been a movement change on one crisis policy front already. As the economy shuttered, the Secondary Market Corporate Credit Facility kicked into action. It provided liquidity in the company bond market to provide liquidity for the many stressed companies caught in cashflow killing shutdown. The Fed currently holds around $8.6 billion in corporate bond EFTs and $5.2 billion in individual corporate bonds which isn't to large on the scale of things.

Quiet as markets were, these little steps build with Wednesday's fifth straight gain for the Dow now. Moderna filed for complete Food and Drug Administration approval of its Covid vaccine for adults pushing the stock up 4%. Visa gained 1.4% after reporting May operating metrics were equal to or better than Aprils results. Oiler Chevron put on 3%, lubricated by oils nascent performance. Finally, Tesla deflated 4% due to a recall of near 6,000 Model 3 and Model Y cars in the U.S. after engineers found loose brake calliper bolts could reduce tire pressure.

US Dow Jones	34600.38	+25.07	+0.1%
US S&P500	4208.12	+6.08	+0.1%
US Nasdaq	13756.33	+19.849	+0.1%
UK FTSE	7108	+27.54	+0.4%
German Dax	15602.71	+35.35	+0.2%
Gold futures ($US/oz)	1909.9	+4.9	+0.3%
Spot Iron Ore ($US/t)	209.45	+0.35	+0.2%

New records came in for Europe's' STOXX 600 index too with a 0.3% addition by the close and autos 1.3% rise again leading the way. Like everywhere, inflation fears capped upside as Euro zone producer prices exceeded April estimates thanks to red hot energy prices. That pushed factory prices up 1% month-on-month and 7.6% annually.

Australia's first quarter GDP soared 1.8% from the fourth quarter on a seasonally adjusted basis well over the 1.5% guessed by economists. Yesterday's fresh record came courtesy of our commodities sectors pushing the S&P/ASX 200 Index up 75.2 points with futures up 19 points half an hour before open.

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