Dow was steady, advancers over decliners 2-1 & NAZ inched up 9. The MLP index added 1+ to the 152s & the REIT index gained 1+ to the 385s. Junk bond funds drifted lower & Treasuries saw heavy selling. Oil dropped 1+ to the 58s following its latest rally & gold rose 5 to 1780 (more on both below),
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The Electric Reliability Council of Texas (ERCOT) which controls the majority of the state's power, said it has returned to normal conditions, as power has been restored for Ms of customers who were left in the dark. However, the impacts from the deadly storm are still being felt across Texas. More than 184K customers in the state still do not have power, according to the latest data from PowerOutage.us. Utility officials say limited rolling blackouts are still possible if electricity demand rises. At one point on Tues, more than 4M customers were without power. While the heat might be coming back, parts of the state's water supply might now be at risk after water pressure dropped, leading to potential contamination. Alison Silverstein, an independent energy consultant & former strategic advisor for the Federal Energy Regulatory Commission, said 20M or more Texans could be forced to boil water. ERCOT officials said yesterday that the grid was “seconds and minutes” away from a far worse disaster, given the rate at which generation was going off the system. Had ERCOT not cut power when it did, the entire grid would have gone down, according to Silverstein. Wintery conditions impacted power production from natural gas, coal, renewables & other sources, just as consumers turned up their thermostats amid frigid temperatures. The grid couldn't match supply-&-demand dynamics.
Texas grid operator says it’s now under normal conditions, millions still under boil-water notice
New York Federal Reserve Pres John Williams said that high prices for stocks & other assets are justified in light of a growing economy & low interest rate landscape. With stocks pushing to new heights on valuations not seen in decades, & as corp bond yields plunge, the central bank official said he's not worried about current pricing. “Market participants and investors around the world are looking ahead through this year and looking into an economy that hopefully have a pretty robust recovery and a strong expansion over the next several years, which would support stronger valuations,” Williams said. Major averages have managed to build on 2020's gains despite some nerve-jangling volatility. Fed policy of low rates & continued asset purchases often is cited as a driving factor in prices for risky assets. Earlier in the day, the Fed's semiannual monetary policy report to Congress noted that “asset valuation pressures have returned to or exceeded pre-pandemic levels in most markets, including in equity, corporate bond and residential real estate markets.” While Williams did not commit to a specific future course for the central bank, he indicated that the environment likely will remain accommodative. “I think the fundamental drivers are optimism among investors that the U.S. economy and the global economy is going to have a stronger recovery and expansion, an expectation of low rates well into the future,” he added. “Those combined will give you high asset valuations.” Williams also addressed the high levels of monetary & fiscal stimulus that have been provided during the Covid-19 pandemic. He is not concerned that policymakers are doing too much, despite an economy that appears to be defying earlier projections for a slow start to 2021. “Right now, the economy has quite a ways to go to get back to maximum employment and we have a ways to go to get back to our 2% inflation target,” he said. “So I’m not really concerned about fiscal support right now being excessive or anything like that. Really, what I want to see is an economy that gets back to full strength as soon as possible.”
Fed’s Williams say high market prices justified by economic growth and low rates
Gold futures ended higher, stretching their gain from a day earlier, but the precious metal still suffered its sharpest weekly drop since early Jan. Yellen yesterday said that recent signs of improvement in the US economy are no reason to scale back the Biden administration's $1.9T relief plan. Apr gold rose $2 to settle at $1777 an ounce, after edging up Thurs & snapping a four-session skid. On an intraday basis, however, the most-active contract fell to as low as $1759, the lowest intraday level since Jun. For the week, gold saw a roughly 2.5% fall, its sharpest weekly slump since the period ended Jan 8. Hope for better economic times in the coming months & some success around COVID vaccines has undercut some of the enthusiasm for bullion. The rise in yields also has helped to draw demand away from precious commodities, which don't bear a coupon, compared against interest-bearing, debt that is perceived as risk-free.
Gold ends higher, but suffers sharpest weekly skid in over a month
Mortgage rates flew to the highest level since mid-Nov this week — a worrying sign for home buyers navigating a market defined by fast-rising home prices. The 30-year fixed-rate mortgage averaged 2.81% last week, up 8 basis points from the week prior, Freddie Mac reported. The increase comes after 3 weeks where the 30-year mortgage rate stayed at 2.73%. The 15-year fixed-rate mortgage rose 2 basis points to an average of 2.21%, while the 5-year Treasury-indexed hybrid adjustable-rate mortgage dipped 2 basis points to 2.77%. As rates do rise, affordability is going to become an issue for some buyers. Already, a decline in the number of mortgage applications suggests that some Americans have been priced out of the market, as a record-low supply of homes for sale has pushed prices higher.
Mortgage rates soar to highest level in months amid inflation concerns
The number of confirmed cases of the coronavirus-borne illness COVID-19 climbed above 110M, as the leaders of the G-7 economies met to discuss the effort to get COVID vaccines to the world's poorest countries. The administration of Pres Joe Biden said it would commit $4B to the World Health Organization's Covax program, which aims to ensure vaccine equity for lower-income countries, which so far have been left behind as wealthier countries have snapped up the bulk of the vaccine supply. The EU said it will double its Covax funding to €1B & pledged another €100M that will be earmarked for African countries. French Pres Emmanuel Macron proposed that Western countries transfer 3-5% of their stock of vaccine to Africa.
Global case tally for COVID climbs above 110.4 million as G-7 gathers to discuss vaccine equity
The flash reading of the IHS Markit US composite purchasing managers index rose to 58.8 in Feb from 58.7 in the prior month, the strongest reading in almost 6 years. Any reading over 50 indicates improving conditions. The index for services rose to 58.9 in Feb from 58.3 in the prior month. The forecast was expecting a 58 reading. The index for the US manufacturing sector, fell to 58.5 from 59.2 & the forecast expectede a 59 reading. The economy is starting to pick up speed as COVID-19 cases are declining & more people are being vaccinated. “The data add to signs that the economy is enjoying a strong opening quarter to 2021, buoyed by additional stimulus and the partial reopening of the economy as virus related restrictions were eased on average across the country,” said Chris Williamson, chief business economist at IHS Markit.
U.S. businesses have strongest expansion in almost six years in February, Markit PMI data show
Oil futures fell, with the US benchmark ending back below the $60-a-barrel level & posting a loss for the week, on expectations that crude output shut down by winter storms in Texas will soon be restored. Expectations that major oil producers making up the OPEC+ group will decide as early as next month to loosen production curbs, as well as early signs of a thaw in US-Iran relations were also a negative for oil prices, analysts said. West Texas Intermediate (WTI) crude for Mar fell $1.28 (2.1%) to settle at $59.24 a barrel, ahead of the contract's expiration at the end of Mon's trading session. Apr, the most-actively traded contract, lost $1.27 (2.1%) to $59.26 a barrel. Based on the most-actively traded contracts, WTI saw a weekly loss of 0.4%, while Brent was up 0.8%, for its 5th consecutive weekly climb, after hitting 13-month highs earlier in the week. Baker Hughes reported that the number of active US rigs drilling for oil edged down by 1 to 305 this week, implying a slight slowdown in output to come. That was the first weekly decline since Nov. Meanwhile, analysts said further downside for oil may be in store as the market pulls back from technically overbought conditions.
U.S. oil benchmark ends back below $60 a barrel as Texas freeze loosens its grip
Dow Jones Industrials
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