US stock markets were closed yesterday for the day of mourning for former president Jimmy Carter. Today, they had to deal with some big-time economic data...and they’re not taking it well. Stocks are down sharply, as are Treasuries. Crude oil is higher along with the dollar.
So, what’s wrong with the data? It came in HOT! The US economy created 256,000 jobs last month, well above the 160,000 that economists expected. The unemployment rate also fell to 4.1%, against Wall Street forecasts for it to remain stable at 4.2%. Average hourly earnings rose 0.3%, in-line with estimates.
10-Year Treasury Yield (5-Day Chart)
You’d think solid economic numbers would spread cheer on Wall Street. But in this case, they’re adding even more upward pressure on interest rates – which investors were already worried about. The yield on the 30-Year Treasury Bond just tagged 5%, while the 10-year yield spiked another 10 basis points to 4.79%. Result: Today’s (early) market flop.
We have a new mega-merger in the utility sector. Constellation Energy Corp. (CEG) is buying Calpine Corp. for $16.4 billion in cash and stock, as well as the assumption of $12.7 billion in Calpine debt. Constellation wants access to Calpine’s power generation facilities because US electricity demand is rising thanks in part to strong AI-and-data-center-related consumption.
Calpine operates 78 power plants in 22 states, which produce 27 gigawatts of electricity all-in. The firm has been privately held since a previous buyout in 2018.
Finally, oil prices are climbing to three-month highs amid rising weather-related demand and fears of fresh sanctions against Russia. US WTI futures rose 4% to around $77 a barrel, helped along by concerns the outgoing Biden Administration could take additional steps to close off global oil markets to Russian suppliers. Commodities traders worry the incoming Trump regime could also target Iranian supply.
