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Paragon Commentary

Futures File: Jobs, Gold & Grains

Jun 07, 2019

Job Market Shakier

The U.S. Bureau of Labor Statistics released its newest monthly estimates on the U.S. employment situation, showing a gloomier outlook. While unemployment remains at a 49-year low of 3.6%, very few new jobs are being created and wages are increasing tepidly. The newest report showed only 75,000 new jobs added during May, half of the recent pace.

Other economic indicators like retail sales and home purchases have been slowing as well, indications that the U.S. economy may be faltering, which many economists attribute to the ongoing trade disputes with China and Mexico, two of the United States’ largest trading partners.

Economic concerns are increasing pressure on the Federal Reserve to lower interest rates, after three years of rising rates. Lower rates could help stimulate the economy and healthy levels of inflation by making borrowing cheaper.

Following the jobs report, U.S. stock index futures climbed, a sign that Wall Street is hoping that the Fed will give the economy a boost, helping U.S. corporate profits as well.

 

Gold Market Glistening

Gold prices shot to a one-year high this week, trading near $1350 per ounce on Friday morning. Gold is benefitting from economic concerns and expectations for lower interest rates, as uncertainty increases demand for the yellow metal.

As gold climbs, it is pulling silver prices higher, which touched a two-month high at $15.15 per ounce this week. Meanwhile, industrial metals like platinum, palladium, and copper have been languishing on concerns of slower global economic growth.

 

Slow Planting Continues

Midwestern corn and soybean farmers are continuing to make slow progress toward planting this year’s crops, increasing expectations that millions of acres will be left unplanted.

Some private companies are forecasting losses of over a billion bushels of corn due to unplanted or late planted crops, which could create the tightest supply in decades. Market watchers are now awaiting the next official forecast from the U.S. Department of Agriculture, due next Tuesday.

Despite the ongoing concerns, corn and soybean prices fell this week amidst the newest trade dispute with Mexico and market concerns that prices had gone too high too fast.

As of midday Friday, this falls’ December corn futures and November soybean futures traded for $4.35 and $8.83 per bushel, respectively.

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