Dow added 273 (near session highs), advancers over decliners 2-1 & NAZ went up 279. The MLP index fell 1+ to the 196s & the REIT index inched up 1 to the 469s. Junk bond funds remained higher & Treasuries continued to be in demand. Oil was up 1+ to the 104s & gold declined 17 to 1925 (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)
Pres Biden held a nearly 2-hour phone call with Chinese Pres Xi Jinping to discuss Russia's invasion of Ukraine. The call was seen as a critical test of whether Biden can convince China to stay on the sidelines of the conflict in Ukraine & to turn down Russian requests for military or economic aid. According to an initial readout of the call from the Chinese Ministry of Foreign Affairs, Xi told Biden that the US & China each had an obligation to promote peace. The White House has yet to issue a formal readout of the call, but said it lasted almost 2 hours, an unusually long time for a presidential call with the leader of a US adversary. Pentagon officials said last week that Moscow has asked Beijing for military & economic assistance to wage its war against Ukraine, & that initial intelligence reports suggested China had agreed. It was unclear from Chinese readouts of the call whether the American pres had shifted Xi's thinking on Russia in any way. Nonetheless, a longer Chinese readout of the call released later suggested that Biden & Xi engaged with one another more productively than many had expected, given the long record of frosty rhetoric between the Biden administration & Beijing. Xi & Biden “share the view that China and the US need to respect each other, coexist in peace and avoid confrontation, and that the two sides should increase communication and dialogue at all levels and in all fields,” the 2nd readout said. On Ukraine, Beijing said its pressing priority was “to keep the dialogue and negotiation going, avoid civilian casualties, prevent a humanitarian crisis, and cease hostilities as soon as possible.” “The world is neither peaceful nor tranquil,” Xi reportedly said to Biden, and “the Ukraine crisis is not something we want to see.” Overall, both Biden & Xi agreed that the call had been “constructive” & they “directed their teams to promptly follow up and take concrete actions to put China-U.S. relations back on the track of steady development, and make respective efforts for the proper settlement of the Ukraine crisis,” Beijing said.China is “ready to provide further humanitarian assistance to Ukraine and other affected countries,” said Beijing, referencing “a six-point initiative on the humanitarian situation in Ukraine.”
China says Xi and Biden’s two-hour call focused on the need for peace in Ukraine
Federal Reserve Governor Christopher Waller said that
the central bank may need to enact one or more 50 basis point interest
rate hikes this year to tame inflation. Though he voted this week for just a 25 basis point move due to uncertainty from the Russian invasion of Ukraine, Waller said he thinks the Fed may need to be more aggressive soon. “I
really favor front-loading our rate hikes, that we need to do more
withdrawal of accommodation now if we want to have an impact on
inflation later this year and next year,” he added. “So in that sense, the way to front-load it is to pull some
rate hikes forward, which would imply 50 basis points at one or multiple
meetings in the near future.” In addition to the rate hikes, Waller said he thinks the Fed needs to start reducing its bond holdings soon. The central bank balance sheet has ballooned to just over $9T & officials are preparing the process to start rolling off some of
their holdings. Waller said that process should start “in the next
meeting or two.” “We’re in a different place than we were before,”
he said. “We have a much bigger balance sheet, the economy’s in a much
different position. Inflation is raging. So, we’re in a position where
we could actually draw down a large amount of liquidity out of the
system without really doing much damage.” Waller's comments came less than 2 hours after one of his colleagues, St Louis Fed Pres James Bullard, said the Fed should raise rates in total at least 300 basis points this year. A basis point is 0.01 percentage point. Before the meeting, Waller also had been pushing for a 50 basis point move, but said he had a change of heart for now. “The
data’s basically screaming at us to go 50, but the geopolitical events
were telling you to go forward with caution,” he continued. “So those two
factors combined pushed me off of advocating for a 50 basis point hike
and supporting the 25-point hike that we enacted.”
Fed Governor Waller says half-point rate hikes could be needed as ‘inflation is raging’
Cases of Covid-19 are rising once again in the UK, according to the
latest figures from the Office for National Statistics (ONS), just as the
gov lifts its remaining travel restrictions. ONS figures published today showed that close to 1 in 21 people, the equivalent of
3.28M, in the UK were estimated to have tested positive for
the coronavirus in the week to Mar 12. In
England alone, 4.87%, equal to around 2.1M or 1 in 20 people,
were thought to have been infected with Covid-19 last week. That was up
from an estimated 3.8% of England's population last week. Hospitalizations
linked to the virus were also up in England last week, to around 13 per
100K people, from 11 per 100K the previous week. The uptick in cases comes as the UK lifted the last of its Covid travel restrictions. Today, people entering the UK are no longer required
to test for the virus or complete a passenger locator form. The prevalence of the omicron BA.2 subvariant was said to have
increased last week across England, Scotland & Wales while the number of omicron BA.1 subvariant infections decreased. The BA.2 variant has been described as a “stealth”
variant because it has genetic mutations that could make it harder to
distinguish from the delta variant using PCR tests, compared with the
original omicron variant, BA.1. Indeed, the rise in cases across Europe more broadly is being attributed to the BA.2 subvariant.
UK Covid cases are back on the rise as government scraps travel restrictions
Gold futures settled lower, with prices booking their sharpest weekly decline since Nov, following a decision by the Federal Reserve this week to raise benchmark interest rates for the first time since 2018. The lackluster week for the precious metal comes as a new regime of higher US & UK interest rates, bearish for bullion, commences with the Fed raising benchmark rates by a qtr percentage point to 0.25-0.5% & laying out plans for ongoing increases in the policy rate, as widely expected. The ICE US Dollar Index was up 0.2% today, but traded around 1% lower for the week. Moves in the $ can impact gold because the precious metal is traded in $s. Apr gold lost $13.90 (0.7%) to settle at $1929 an ounce, following a 1.8% advance yesterday, which halted a 4-session skid. For the week, gold fell 2.8%, marking the biggest weekly percentage decline for a most-active contract since Nov 26 of last year.
Gold futures post losses for session and week as Fed rate-hike regime starts
Oil futures settled higher after talks between Moscow & Kyiv made little progress, but prices still registered a loss of more than 4% for the week. West Texas Intermediate crude for Apr rose $1.72 (1.7%) to settle at $104.70 a barrel, with the front-month contract posting a 4.2% weekly fall. May Brent crude the global benchmark, climbed $1.29 (1.2%) to $107.93 a barrel, for a 4.2% weekly decline. Talks between Moscow & Kyiv stalled after signs of optimism earlier this week that fueled a reversal to the downside by crude futures, which had hit nearly 14-year highs last week. Meanwhile, world leaders are pushing for an investigation of Russia's repeated attacks on civilian targets, including airstrikes on schools, hospitals & residential areas. The US & its allies have hit Russia with severe sanctions, with the US also banning imports of Russian crude. Western sanctions have largely attempted to exempt Russian energy flows, but analysts & others have warned that Russian supply is likely to be sharply curtailed in the months ahead. In a press release today, the IEA said there are measures that advanced economies can take to “achieve significant reductions in oil demand in a matter of months” to reduce the risk of a major supply crunch. It said its “10-Point Plan to Cut Oil Use” would lower oil demand by 2.7M barrels a day within 4 months.
Oil falls more than 4% for the week as traders weigh prospects for Russian crude supplies
Dow Jones Industrials
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