June 1, 2011
Are we ready for QE3? Slowdown indications took a severe turn with today's data which were led off by an ADP estimate for a private-payroll gain of only 38,000 compared to expectations for 210,000. The ISM manufacturing report followed with the sharpest headline decline since 1984.
Gold surged $20 to a new record of $1,550 on the assumption that economic slowing will be met by new Federal Reserve balance sheet measures, called currency dumping in the gold market. Demand for Treasuries also rose with yields falling 12 basis points for the 10-year note to 2.95 percent. Throw in weak vehicle sales for May and another downgrade for Greece, this time from Moody's, and risk-bearing markets really took a hit with the Dow falling a very severe 2.2 percent to 12,290. Oil slipped a couple of dollars but is still posing economic headwinds at $100.