Dow dropped 368 (more than 700 below the early highs), decliners over advancers about 4-1 & NAZ pulled back 278. The MLP index fell 3+ to the 221s & the REIT index was off 2+ to the 497s. Junk bond funds drifted lower along with the stock market decline & Treasuries were sold. taking the 10- year Treasury yield over 2.9%. Oil went up 1+ to the 103s & gold edged lower by 1 to 1953 (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)
Federal Reserve Chair Jerome Powell said that central bank officials could raise interest rates by 50-basis points in May & following months as they seek to tame the hottest inflation in 4 decades. "It is appropriate to be moving a little more quickly," Powell said during a panel at the IMF & World Bank spring meetings. "I also think there’s something in the idea of frontend-loading whatever accommodation one thinks is appropriate. So that points in the direction of 50-basis points being on the table." Stocks gave up earlier gains following his remarks. Fed policymakers voted during their 2-day meeting in Mar to raise rates by 25-basis points, bringing to an end the ultra-easy monetary policy put in place 2 years ago to prop up the economy thru the COVID-19 pandemic. They also projected at least 6 more, similarly sized increases over the course of this year. But in the weeks since then, policymakers – including Powell – have floated the possibility of a more aggressive trajectory amid concerns that the central bank waited too long to begin tightening policy. Traders are now pricing in nearly a 100% chance of a hefty ½-point rate jump when policymakers meet next month, instead of a more modest ¼-point increase. It would mark the first time since 2000 that the central bank raised the federal funds rate by 50 basis points.
Fed's Powell confirms half-point rate hike 'on the table' in May
Treasury yields jumped as Federal Reserve Chair Jerome Powell signaled that a larger-than-usual rate hike could be on the horizon for next month. The yield on the benchmark 10-year Treasury note rose 9 basis points to 2.94% & the yield on the 30-year Treasury bond moved 9 basis points higher to 2.96%. Yields move inversely to prices & 1 basis point is equal to 0.01%. Powell today reiterated the central bank's determination to bring inflation down & said that aggressive rate hikes are possible as soon as next month. “It is appropriate in my view to be moving a little more quickly” to raise interest rates, Powell said. “I also think there is something to be said for front-end loading any accommodation one thinks is appropriate. ... I would say 50 basis points will be on the table for the May meeting.” This comes after the IMF cut its global economic growth forecast on Tues, for both 2022 & 2023, largely due to the effects of Russia's invasion of Ukraine. Investors will be listening closely to Powell's remarks for any more clues around the Fed's plans to aggressively tighten monetary policy, in order to rein in inflation. Concerns around inflation & the potential effect of tighter Fed policy has seen yields spike, with the 10-year hitting its highest point since late 2018, at 2.94%.
Treasury yields jump after Fed’s Powell hints a 50-basis-point rate hike
The Florida state legislature passed a bill seeking to dissolve a special district that allows Walt Disney (DIS), a Dow stock, to act as its own gov within the outer limits of Orange &
Osceola counties. The bill passed the state Senate yesterday with a vote
of 23-16 & sailed thru the state's House of Representatives by a
vote count of 70-38. The
proposal was first introduced Tues by Rep state Sen
Jennifer Bradley, but opponents claim it's really driven by Gov DeSantis. DeSantis is locked in a bitter & public feud with DIS over the company's denouncement of Florida's HB 1557 law last
month. HB 1557, dubbed the “Don’t Say Gay” bill, limits early education
teachings on sexual orientation or gender identity. Until
recently, there had been no major public discussion about dissolving the long-established special district, which it's occupied for 55
years, leading opposing senators & other critics of the bill to
question its timing & the speed at which it’s being pushed thru. State
Rep Randy Fine said that the bill isn't
retaliatory, but said “when Disney kicked the hornet’s nest, we looked
at special districts.” The stock was off 2.93.
If you would like to learn more about DIS click on this link:
club.ino.com/trend/analysis/stock/DIS_aid=CD3289&a_bid=6ae5b6f
Florida votes to dissolve Disney’s special district, eliminating privileges, setting up legal battle
Chicago Federal Reserve Pres Charles Evans will retire from his position in early 2023. Long one of the Fed's most consistent policy doves, or in favor of lower rates & more accommodation, Evans, 64, did not elaborate on why he was stepping down. “It has been an honor to serve as a president of the Chicago Fed and as a member of the Federal Open Market Committee for the last 14 years,” Evans said in a statement. “I have been privileged to work with talented, dedicated and mission-driven colleagues who are singularly focused on serving the public interest, the Seventh District and our nation. I am immensely proud of the work our bank has accomplished.” Evans joined the Chicago Fed in 1991 & has served in his current role since 2007. He helped develop the “dot plot” the Federal Open Market Committee now publishes showing participants' views of appropriate monetary policy. “Charlie has been an influential and insightful voice at the monetary policy making table for nearly 15 years,” said Fed Chair Jerome Powell. “He is our longest-serving member and has been engaged in public service at the Chicago Fed for more than three decades. Charlie consistently brings data-driven analysis, unfailing collegiality, and a keen interest in seeking out differing views. He is an example of the very best in public service.” Evans recently said he believes current Fed policy on interest rates is “wrong-footed” & will need to adapt. He said last month that the Fed should be moving toward a more neutral monetary policy certainly by the end of the year.
Chicago Fed President Charles Evans to retire in early 2023
Gold futures posted a 3rd consecutive decline, extending their retreat from Mon's high above $2000 an ounce. Gold for Jun fell $7 to settle at $1948 an ounce, leaving it down 1.4% for the week. Gold was pressured yesterday as the real, or inflation-adjusted, yield on the 10-year Treasury note briefly moved above zero for the first time since 2020. Gold had previously been largely brushing off rising yields, which raise the opportunity cost of holding a nonyielding asset. Yesterday, Fed Chair Jerome Powell said it is “appropriate in my view to be moving a little more quickly” on raising interest rates. Still, gold has been underpinned by haven-related demand as Russia's invasion of Ukraine grinds on. Moscow said it submitted a draft of its demands for ending the war, while the US & its allies raced to supply Ukraine with heavier weapons to counter the Russian offensive in Ukraine's industrial east. Britain's Defense Ministry said in an assessment that Russia likely wants to demonstrate significant successes ahead of its annual May 9 Victory Day celebrations.
Gold futures mark a third straight decline
Oil futures finished higher, but below the session’s best levels, as the EU continued to mull the prospect of banning imports of Russian crude. West Texas Intermediate crude for Jun rose $1.60 (1.6%) to settle at $103.79 a barrel after trading as high as $105.42. Jun Brent, the global benchmark, added $1.53 (1.4%) at $108.33 a barrel. EU countries are edging closer to a plan to eventually phase out imports of Russian oil. The US & UK previously moved to implement bans in response to Russia's invasion of Ukraine, while the EU has moved more slowly amid resistance given the region's heavy reliance on energy supplies from the country. Treasury Secretary Janet Yellen said that it was essential for the EU to end its dependence on Russian energy, but also warned that a total embargo on energy imports from Russia would lead to sharp prices increases in Europe. Moscow said it submitted a draft of its demands for ending the war, while the US & its allies raced to supply Ukraine with heavier weapons to counter the Russian offensive in Ukraine's industrial east. Britain's Defense Ministry said in an assessment that Russia likely wants to demonstrate significant successes ahead of its annual May 9 Victory Day celebrations. Libya's National Oil Corp said 550K barrels a day of production is being lost due to blockades on major oilfields & export terminals. Total US domestic petroleum production rose by 100K barrels to 11.9M barrels per day last week — the highest weekly production level since May 1, 2020.
Oil prices end higher as traders weigh potential EU ban on Russian oil
Dow Jones Industrials
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