Dow shot up 132, advancers over decliners 5-2 & NAZ gained 43. The MLP index went up fractionally to the 264s. Junk bond funds inched higher & Treasuries were purchased again, taking the yield on the 10 year Treasury down to 2.88%. Oil climbed to the 63s & gold fell 1 to 1330.
AMJ (Alerian MLP Index tracking fund)
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 62.97 | +0.20 | +0.3% |
| GC=F | Gold | 1,330.40 | -2.30 | -0.2% |
Stocks pared a weekly loss, Treasuries edged higher & the $ slipped as investors await clues on Federal Reserve policy intentions under new Chairman Jerome Powell. The S&P 500 rose at the open as it looks to keep its weekly slide below 1%. The gauge has finished the past 3 days well off its session highs amid afternoon declines. The 10-year Treasury yield held above 2.88%, roughly where it started the week, as investors await the Fed's semiannual monetary policy report to Congress. The $ was flat versus major peers. The report will provide the basis for Powell's testimony to lawmakers next week, where he could offer a clear view on his assessment of the economy & explain how comfortable policy makers are with their baseline scenario of 3 hikes this year, or even signal faster tightening ahead. Traders will pay close attention to any remarks over elevated asset valuations & broader market imbalances. The Stoxx Europe 600 Index edged up as gains in telecom shares offset declines in retailers. The MSCI Asia Pacific Index rose earlier, underpinned by gains from Sydney to Shanghai. Yields on 10-year German bunds dropped to the lowest since Jan & the common currency slipped.
U.S. Stocks Rise With Treasuries, Dollar Mixed: Markets Wrap
Treasury Sec Steve Mnuchin brushed aside signs that investors are nervous about rising prices and criticism that growing debt will harm US economic security, declaring that Pres Trump's policies won’t cause inflation. “There are a lot of ways to have the economy grow,” Mnuchin said in an interview. “You can have wage inflation and not necessarily have inflation concerns in general.” “You can have wage inflation and not necessarily have inflation concerns in general.” He also said he isn't concerned about foreign investment in new US debt, which analysts expect will exceed $1T this year. An unexpectedly large jump in average hourly earnings in Jan set off a stock market swoon as investors worried about higher inflation & interest rates. In addition, long-term Treasury yields have surged in recent weeks, in part driven by concerns that widening budget deficits under the Trump administration will fuel inflation. As Trump’s chief economic cheerleader, Mnuchin has consistently deflected any suggestion that Trump's policies could have a downside. He sidestepped the idea that tax cuts & increased federal spending Trump has signed into law amount to an economic stimulus. “Is it very good for the economy? Absolutely,” Mnuchin said of the tax cuts. “One of the reasons why the president won the election is because most middle-class Americans had very little wage growth.”
Mnuchin Urges Markets to Shrug Off Tax Cuts, Debt Worries
Germany saw a record budget surplus last year thanks to unbroken economic growth. The
Federal Statistical Office said that public treasuries received
€36B ($45B) more than they spent in 2017. The
figure was slightly less than had been forecast. Germany has now recorded a surplus for 4 years straight. Strong
export-driven growth has boosted tax revenue, with the country's GDP rising a further 0.6% in Q4 of
last year compared with the previous 3 months. Germany has also benefited from the ECB's low interest rates, which have made the cost of public
borrowing considerably cheaper. Economists predict Germany's growth will continue this year, rising to 2.4% compared with 2.2% in 2017.
Germany books record surplus as economy keeps growing
The stock market had a tough week but wants to finish on a positive note. The Dow began the shortened week going below 25K & looks like it will finish above that level. With a rally in the PM, it is possible that the Dow can record a modest gain for the week. The biggest news for the Dow was that Walmart (WMT), a Dow stock & Dividend Aristocrat, lost 12 this week (finishing near the lows), on disappointing earnings. The long bull market rally has taken a pause in Feb. Next week the bulls will try to energize the rally while the prospects of higher interest rates haunt traders.
Dow Jones Industrials
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