Dow declineed 117, decliners over advancers 3-2 & NAZ went up 102. The MLP index lost 1, faling back to the 166s, & the REIT index was flattish in the 411s. Junk bond funds crawled higher & Treasuries were purchased. Oil rose to 60 & gold gained 10 to 1743.
AMJ (Alerian MLP index tracking fund)
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Consumer prices rose in Mar at the fastest monthly pace in 8.5 years as the reopening of the economy picked up steam. The Labor Dept said that the consumer price index rose 0.6% month over month, quickening from last month’s 0.4% increase. The reading made for the highest monthly increase since 2012. Prices jumped 2.6% year over year, up from a 1.7% annual increase in Feb. The forecast had expected consumer prices to rise 0.5% from the prior month & 2.5% versus the last year. Gasoline prices rose 9.1% in Mar, making up nearly ½ of the gain. Elsewhere, natural gas prices rose 5% & food both at home & away from home saw a 0.1% increase. Core prices, which exclude food & energy, increased 0.3% month over month & 1.5% from a year ago. The forecast was for core prices to rise 0.2% on a monthly basis & 1.5% annually. The annual data has a "base effects" skew due to the decline in prices that occurred at the start of the pandemic. The jump in consumer prices comes amid concerns that the unprecedented amount of fiscal & monetary stimulus that has been used to combat the economic slowdown caused by the COVID-19 pandemic will bring back inflation that has been missing since the 2008 global financial crisis. There are worries the Federal Reserve may have to begin tapering its asset purchase program sooner than expected in order to prevent inflation from overshooting the central bank's 2% target. The Fed said last year that it would hold its benchmark interest rate near zero, for some time, even if inflation were to rise above its preferred rate.
Consumer prices surge by most since August 2012
As US Covid cases rise, the country is also administering the vaccine shots aimed at preventing the spread of the virus at the swiftest pace ever. Cases are on the rise in 27 states, with Michigan continuing to lead the nation in daily new cases per capita. Following more than 70K coronavirus cases reported yesterday, the 7-day average of daily new cases in the US is 69K, according to data from Johns Hopkins University. That figure is up 7% from one week ago & the 7-day average of daily reported Covid deaths in the US is 962. The latest trend in the death toll is being impacted by a bulk data release of about 1800 deaths from Oklahoma, which occurred because the Oklahoma State Dept of Health is transitioning to data reporting guidelines in line with CDC requirements. Those deaths are all currently being reported for Apr l 7, even if they occurred previously. Prior to this reporting anomaly, the daily Covid death toll in the US had been trending downward from the record levels seen in Jan. CDC data show 2.6M vaccine doses reported administered yesterday, bringing the 7-day average of reported doses administered in the US to a record 3.2M per day. The Food & Drug Administration (FDA) said it is asking states to temporarily halt using Johnson & Johnson's (JNJ), a Dow stock & Dividend Aristocrat, Covid-19 vaccine “out of an abundance of caution” after 6 women in the US developed a rare blood-clotting disorder. “Right now, these adverse events appear to be extremely rare,” the FDA said in a joint statement with the CDC. More than 120M people, 36% of the US population, have received one or more doses of a Covid vaccine & more than 1 in 5 Americans are fully vaccinated, according to the CDC.
Covid cases are rising in more than half of U.S. states, despite ramp up in vaccinations
Treasury yields were flat after a key inflation report came in slightly hotter-than-expected. The yield on the benchmark 10-year Treasury note dipped to 1.664% & the yield on the 30-year Treasury bond fell to 2.344%. Yields move inversely to prices. Consumer prices rose Mar, the Labor Dept reported. The consumer price index rose 0.6% from the previous month but 2.6% from the same period a year ago. Yields got hit when the FDA said it is asking states to pause administering JNJ's Covid-19 vaccine after 6 people in the US developed a rare disorder involving blood clots. The FDA said the recommendation is “out of an abundance of caution.” Treasury yields have jumped from just below 1% since the end of Jan, over fears of inflation rising as the US economy recovers from the coronavirus pandemic.
Treasury yields are flat after key inflation report comes in slightly higher than expected
For the time being, the inflation news is not as bad as it sounds. Food & energy are volatile & big swings have to be expected. The JNJ news is more disturbing & that needs to be watched. Earnings from the big banks are coming this week & they will move the markets.
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