Dow went up 100 (nearing 35K), advancers modestly ahead of decliners & NAZ added 14. The MLP index was off 1 to the 195s & the REIT index rose 2 to the 462s (a record). Junk bond funds inched higher & Treasuries were flattish (more below). Oil slid back to 74 & gold dropped 3 to 1807.
AMJ (Alerian MLP index tracking fund)
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UK Prime Minister Boris Johnson is expected to confirm today that the final easing of lockdown rules in England will go ahead of Jul 19. The move comes despite a continuing surge in coronavirus cases caused by the more infectious delta variant; over 31K new cases were reported yesterday. Johnson is expected to urge caution amid the country’s reopening, however, & stress that some public some measures, like mask-wearing, are a matter of personal responsibility & sensible decision-making. He has previously said that Covid should become “a virus that we learn to live with,” like flu. In comments by the gov, Johnson said: “We are tantalisingly close to the final milestone in our roadmap out of lockdown, but the plan to restore our freedoms must come with a warning.” “While the phenomenal vaccine rollout has offered every adult some protection against the virus, and the crucial link between cases, hospitalisations and deaths is weakened, the global pandemic is not over yet.” Johnson said Covid cases will rise as the country unlocks, “so as we confirm our plans today, our message will be clear. Caution is absolutely vital.” “Freedom Day” — or Step 4 in the gov's long-term plan to ease restrictions — was moved to Jul 19 having previously been scheduled for Jun 21.
England expected to confirm lockdown lifting despite fears over delta surge
Treasury yields fell with investor attention turning to the release of inflation data & congressional testimony by Federal Reserve Chair Jerome Powell later in the week. The yield on the benchmark 10-year Treasury note fell 2 basis points to 1.334% & the yield on the 30-year Treasury bond dipped 2 basis point to 1.963%. Yields move inversely to prices and 1 basis point equals 0.01 percentage point. The inflation rate for the US in Jun is set to be released tomorrow. Meanwhile, Powell is due to give his semiannual monetary policy report before the House & Senate on Wed & Thurs.
Treasury yields start the week slightly lower, 10-year Treasury around 1.34%
The ECB will change its guidance on the next policy steps at its next meeting to reflect its new strategy & show it is serious about reviving inflation, Pres Christine Lagarde said. Announced last week, the ECB's new strategy allows it to tolerate inflation higher than its 2% goal when rates are near rock bottom, such as now. This is meant to reassure investors that policy won't be tightened prematurely & boost their expectations about future price growth, which has lagged below the ECB's target for most of the past decade. "Given the persistence that we need to demonstrate to deliver on our commitment, forward guidance will certainly be revisited," Lagarde added. The ECB's current guidance says it will buy bonds for as long as necessary & keep interest rates at their current, record-low levels until it has seen the inflation outlook "robustly converge" to its goal. Lagarde did not elaborate on how that message might change, simply saying the ECB's aim will be to keep credit easy. "My sense is that we will continue to be determined by maintaining favourable financing conditions in our economy," she said. She added this was not the right time to talk about dialing back stimulus and that the ECB's Pandemic Emergency Purchase Programme, which is worth up to €1.85Ts, could "transition into a new format" after Mar 2022, its earliest possible end-date.
ECB to change policy guidance at next meeting, Lagarde says
There is limited buying in stocks while negative thinking investors are buying Treasuries. Early earnings reports along with the last inflation reports will be watched closely this week.
Dow Jones Industrials
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