Dow went up 133, decliners barely ahead of advancers & NAZ fell 136. The MLP index crawled up 1 to 175 & the REIT index 2+ to the 394s. Junk bond funds hardly budged & Treasuries plunged, taking the yield on the 10 year Treasury up 10 basis points to 1.6% (more below). Oil slid lower in the 65s & gold sank 13 to 1708.
AMJ (Alerian MLP index tracking fund)
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US producer prices rose in Feb as the cost of energy spiked, leading to the sharpest annual increase in producer inflation in 2½ years. The
Labor Dept said that its producer price index (PPI) for final
demand rose 2.8% year over year, picking up from last month's 1.7%
annual increase. The Feb reading made for the largest annual
increase since Oct 2018. Prices edged up 0.5% month over month, slowing from the 1.3% increase in Jan. The forecast was for PPI to rise 2.7% from a year ago & 0.5% versus the prior month. More
than 2/3 of the Feb increase was the result of prices for
final demand energy climbing 6%. Nearly ½ of the jump in energy
prices was due to a 13.1% increase in the cost of gasoline. Diesel fuel,
meat & poultry, and electricity prices were some of the other goods
that saw price increases. Prices
for fresh & dry vegetables, meanwhile, declined by 16.7%. Steel &
bottled liquor prices (excluding brandy) also declined. Core
producer prices, which exclude the volatility from food and energy,
rose 2.5% year over year & 0.2% on a monthly basis. The forecast
expected those prices to increase by 2.6% &
0.2%, respectively.
Producer prices post biggest annual increase since October 2018
The 10-year Treasury yield climbed to its highest level in more than a year after Pres Biden signed his stimulus package into law & announced he would direct states to make all adults eligible for the coronavirus vaccine by May 1. The yield on the benchmark 30-year Treasury bond rose 10 basis points to 2.385%. Yields move inversely to prices & 1 basis point equals 0.01%. Treasury yields climbed after Biden signed the $1.9T coronavirus relief package into law on yesterday. In addition to announcing his plan to make Covid vaccines available to all adults aged 18 & above, Biden said in his first primetime address to the nation that Americans should hopefully be able to gather in small groups to celebrate the Fourth of July. Yields were also higher after the number of weekly new jobless claims came in lower than expected yesterday, totaling 712K for the week, below the 725K estimate. The 10-year yield has risen rapidly recently, shooting up from 1% since the end of Jan, amid concerns about rising inflation. These concerns have been compounded by fears that the gov's fiscal relief package, alongside the reopening of the economy, could stimulate it too quickly & cause a surge in prices. Investors will be watching for next week's Federal Reserve decision on interest rates & commentary about the central bank's stance on the rising bond yields.
10-year Treasury yield jumps to highest level in more than a year
The US death toll from the coronavirus-borne illness COVID-19 climbed above 530,K, a day after Pres Biden used the anniversary of the day the World Health Organization declared a pandemic to pledge to make all Americans eligible for vaccination by May 1. In his first address to the nation since taking office, Biden announced an expansion of efforts to accelerate the vaccine program, including deploying an additional 4K active-duty troops to support vaccination efforts & allowing more people — such as medical students, veterinarians & dentists — to deliver shots. He is also directing more doses toward some 950 community health centers & up to 20K retail pharmacies, to make it easier for people to get vaccinated closer to their homes. Biden said his administration will launch a website to help people find doses & raised the prospect of “independence from this virus” by the Jul 4 holiday.
U.S. COVID death toll tops 530,000 as Biden pledges vaccines for all by May 1
While the Dow reached another record, that's not the story today. Investors are very nervous when Treasury yields shoot up (i.e.when bonds are sold) on inflation fears. The data from PPI was grim & next month should show another jump in in the PPI with Brent oil around 70 (a 2 year high). Making matters worse, the yield on mortgages will keep rising as it tracks changes in yields in the 10 year Treasury. Optimistic investors are growing nervous.
Dow Jones Industrials
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