A Melman Minute — July 8, 2011

Markets this morning were stunned by a profoundly negative U.S. Department of Labor jobs report which showed that only 18,000 new jobs were created by the U.S. economy during June, far, far below expert predictions. It is also worth noting that the Unemployment Rate rose to 9.2%, up by one-tenth percent from the previous month.

Market observers had been expecting a much more positive report and financial markets sold off sharply on the news with the Dow Industrials dropping by over 150 points shortly after the opening bell.

Other markets reacted sharply as well. Gold moved higher on the news, rising above the $1,540 mark; crude oil sold off by more than $2.00 per barrel to under the $97 mark; and U.S. government debt instruments rose sharply as investors perhaps figured that interest rates would drop, given the Feds desire to keep rates as low as possible, now that further stimulation of the economy seems to be in the cards. The chart of the TYX Index, which measures the interest rate on 30-year US government bonds, shows todays sharp decline in those rates, plunging to barely 4.30%..

In the meantime, the two biggest influences on the American financial media continue to move along at a veritable snails pace. Comments by President Obama about the urgency of resolving the national debt limit impasse his latest such comments came this morning have yet to be followed by any decisive action and the same situation continues to exist in Congressional efforts toward working out an operating budget for the government.

Regrettably, I must take care of an optical appointment set for later this morning and must cut these musings short.

As of 9:40 AM PDT, gold continues to show gains for the morning, now trading near $1,542, up by about $11.00 on the session. Silver is trading close to unchanged while platinum, palladium and copper are actually lower so far today as are the other base metals. Mining share indexes are close to unchanged today, but it should be noted they have significantly outperformed the metals themselves over the past few sessions. Financial markets remain weak with the Dow Industrials off by about 115 points and Canadas TSX Index is about 40 points lower.

In other markets, the US Dollar is slightly higher, crude oil continues trading sharply to the downside and, as noted, long term US bond interest rates are also lower.

All quotes US$ unless otherwise indicated.

Next Melman Minute scheduled for Monday, July 11, 2011

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