Dow dropped 171 (well off session lows), decliners over advancers better than 2-1 & NAZ was off only chump change. The MLP index fell 3+ to the 203s & the REIT index declined 8+ to 351. Junk bond funds continued lower & Treasuries were sold, taking the yield on the 10 year Treasury just under 2%. Oil jumped up to the 94s, another 7 year high, & gold soared 31 to 1873 ( 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)
Americans' inflation fears declined for the first time in over a year in Jan, although
concerns over rising prices remained near a record-high level, according
to a key
Federal Reserve Bank of New York survey. 
The
median expectation is that the inflation rate will be up 5.8% one year
from now, down from an 11-year high of 6%, according to the New York
Federal Reserve's Survey of Consumer Expectations. It marked the first
time since Oct 2020 that consumers' short-term inflation
expectations fell. Inflation expectations over the next 3 years also
dropped to 3.5%, down from 4% last month. With consumers lowering their expectations for inflation over the
next year, they believe that things like gasoline, food, medical care,
rent & college tuition will get cheaper. "Taken together,
these findings indicate that consumers are taking less signal than
before the pandemic from inflation news in updating their longer-term
expectations, and that they do not view the current elevated inflation
as very long-lasting," New York Fed economists wrote in an accompanying
analysis. The report is based on a rotating panel of 1300 households. The
survey plays a critical role in determining how Fed policymakers
respond to the recent inflation spike because actual inflation
depends – at least in part – on what consumers think it will be. It's a
sort of self-fulfilling prophecy – if everyone expects prices to rise by
3% in the year, that signals to businesses that they can increase
prices by at least 3%. Workers, in turn, will want a 3% pay raise to
offset the rising costs.
Americans' inflation fears decline for first time in over a year
The latest Consumer Price Index reading, the highest in four decades, isn’t the only sign that inflation is extending rather than giving up its hold over the USS economy in 2022. An increasing number of American small businesses say they are now passing on higher costs to customers, or soon will be forced to make that decision. While the 74% of small business owners who say they are experiencing rising costs of supplies is virtually unchanged from Q4 2021, according to a new CNBC/SurveyMonkey Small Business Survey, the number of businesses passing on costs to customers has risen to 47% in Q1, up from 39% in Q4-2021. And another 32% indicate they will have to raise prices soon if inflation persists. Sticky inflation is their expectation. Over 80% of small business owners expect inflation to still be a problem six months from now (55% say that is “very likely”). The Main Street concerns about inflation are connected to the small business outlook on the supply chain, with 75% saying these issues are likely to be a problem 6 months from now. And there is a lack of faith in policymakers, with 71% of small business owners not confident in the Federal Reserve's ability to control inflation. “The underlying problem with inflation is that there’s no end in sight,” said Laura Wronski, senior manager of research science at Momentive, which conducts the survey. “We’ve become accustomed to rising and falling Covid waves & businesses have had the time to rewrite their playbooks to accommodate. But no one knows how quickly or to what degree inflation will continue to rise, so that unpredictability is inducing some unease,” she said, with the lack of faith in the Fed adding to the uncertainty.
A new inflation number shows Main Street tipping point has been reached
Oil eased from its highest in more than 7 years as Ukraine
hinted at possible concessions to Russia that could alleviate tensions
between the 2 countries that Western govs say are on the brink
of war. Brent crude was down 60¢ (0.6%) at $93.84 a barrel after touching its highest since Oct 2014 at $96.16. US
West Texas Intermediate (WTI) crude fell 47¢ (0.5%) to $92.63
after hitting $94.94, the loftiest since Sep 2014. Comments from the US about an imminent attack by Russia on Ukraine have rattled global financial markets. Russia
could invade Ukraine at any time & might create a surprise pretext
for an attack, the US said yesterday. Moscow denies that it
plans to invade & has accused the West of hysteria. However, markets later cooled as Ukrainian Ambassador Vadym Prystaiko
said Ukraine was prepared to make some concessions to Russia. Supplies have been stretched as OPEC+ has
struggled to deliver monthly pledges to increase output by 400K
barrels per day (bpd) until Mar. Investors are also watching talks between the US & Iran to revive the 2015 nuclear deal. The Iranian foreign minister today said that Iran was "in a hurry"
to reach a swift agreement with world powers in nuclear talks in Vienna,
provided its national interests are protected.
Oil eases as Ukraine hints at concessions to Russia
Gold futures climbed, ending at a nearly 3-month high, as fears of a potentially imminent Russian invasion of Ukraine sparked demand for safe-haven assets. Gold held up, however, after Russian Foreign Minister Sergei Lavrov, speaking in a meeting with Russian Pres Vladimir Putin, suggested that Moscow should continue to talk with NATO & the EU. Gold for Apr rose $27 (1.5%) to settle at $1869 an ounce after trading as high as $1872. Most-active gold futures haven't settled at a level this high since Nov. Gold saw prices ended higher Fri in regular trading, then extended gains in electronic trade to hit a level last seen in Nov after Jake Sullivan, the White House national security adviser, warned that a Russian invasion of Ukraine could occur "any day now." Pres Biden & Putin spoke by phone Sat, but the discussion produced no tangible breakthroughs. The White House said Biden made clear to Putin that an invasion would see the US & its allies impose "swift and severe costs on Russia." Biden has ruled out sending US combat troops to Ukraine, but has threatened sweeping sanctions against Moscow. The ICE US Dollar Index, a measure of the currency against a basket of 6 major rivals, was up 0.2% today. Treasury yields had jumped last week on expectations for more aggressive Fed tightening as data showed inflation continued to run hotter than expected. In dealings today, the yield on the 10-year Treasury note was up at 1.999%, compared with 1.951% at Fri.
Gold prices settle at a 3-month high as Russia-Ukraine tensions spark demand
Oil futures headed higher, with prices eyeing their highest settlements in more than 7 years as traders weigh developments tied to the Russia-Ukraine crisis, which may disrupt an already tight global crude-oil market. Russia’s top diplomat urged further talks with NATO & the EU over Ukraine today. US & global crude benchmarks had ended Fri at 7-year highs Fri after Jake Sullivan, the White House national security adviser, warned that a Russian invasion of Ukraine could occur “any day now.” West Texas Intermediate crude for Mar rose $2.36, (2.5%) to settle at $95.46 a barrel, the highest front-month contract finish since Sep 2014. Apr Brent crude the global benchmark, rose $2.04 (2.2%) at $96.48 a barrel on ICE Futures Europe for the highest settlement since Sep 2014. Foreign Minister Sergei Lavrov suggested Moscow should continue to talk with the US & its allies even though they have rejected Russia's main security demands. Lavrov's remarks came after the weekend saw no signs of a diplomatic breakthrough over Ukraine. Russia has amassed over 100K troops on the country's border but has denied plans to invade. A Russian invasion of Ukraine has been seen as likely pushing oil above $100 a barrel, at least temporarily, while Russia's role as a key energy supplier to Europe could make for a broader energy shock. But Lavrov's remarks appeared to trigger some relief across financial markets, with US benchmark stock indices trading mixed Treasury yields, which had been pulled down as investors sought safety in traditional havens like gov bonds, also ticked higher.
Oil climbs toward $100, settles at highest since 2014 on Russia-Ukraine tensions
Dow Jones Industrials
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