Dow tumbled 981, decliners over advancers over 4-1 & NAZ dropped 335. The MLP index sank 5+ to the 215s & the REIT index sold off 8+ to the 288s. Junk bond funds remained weak & Treasuries crawled a little higher, but yields remain elevated. Oil was down 2+ to the 101s on fears of demand destruction & gold fell 13 to 1934 (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)
Wall Street is betting the Federal Reserve will raise interest rates at the steepest pace in over 2 decades as policymakers look to tame red-hot inflation. Traders are already pricing in a 100% chance of a ½-point rate increase during the Fed's May meeting, in addition to at least 3 more 50-basis point hikes at the central bank's subsequent meetings in Jun, Jul & Sep, according to the CME Group, which tracks trading. By Sep, traders expect the federal funds target range to be at least 2.25-2.5%, well above the current range of 0.25% to 0.50%. Fed policymakers raised rates by a ¼-percentage point in Mar, but have since confirmed that sharper, ½-point increases are likely in the coming months, beginning in May, as they look to quell inflation. The gov reported last week that prices soared by 8.5% in Mar from the previous year, the fastest pace since 1981. "It is appropriate to be moving a little more quickly," Fed Chair Jerome Powell said. "I also think there’s something in the idea of front end-loading whatever accommodation one thinks is appropriate. So that points in the direction of 50-basis points being on the table." Some economists believe the Fed waited too long to confront the burst in inflation, while others have expressed concerns that moving too quickly to stabilize prices risks triggering an economic recession. Hiking interest rates tends to create higher rates on consumer & business loans, which slows the economy by forcing employers to cut back on spending. Major financial firms are forecasting the possibility of at least a modest recession in 2023 as the Fed crushes consumer demand with higher interest rates. Powell has pushed back against concern that further tightening by the central bank will trigger a recession & has maintained optimism that the Fed can strike a delicate balance between taming inflation without crushing the economy. Still, he acknowledged the difficulty of the task ahead & said that it is "absolutely essential" for central bankers to restore price stability. "Our goal is to use our tools to get demand and supply back in sync, so inflation moves back into place, without a slowdown that amounts to a recession," Powell added. "I don't think you'll hear anyone at the Fed say that's straightforward and easy. It's going to be challenging.
Wall Street ramps up Fed rate hike expectations as inflation roars
UN Secretary-General António Guterres said Russian Pres Vladimir Putin & Russian Foreign Minister Sergey Lavrov agreed to meet him in Moscow next week.
UN chief to meet Putin next week; Russia declares intent to control Donbas and southern Ukraine
People have wide-ranging views of what it means to be “high net worth,” according to a survey from digital wealth manager Personal Capital. Yet most people — 74% — don't see themselves ever fitting into that category. When 2209 adults were asked what they would consider high net worth, the median average among all responses was $400K. Meanwhile, 32% of respondents agree with the broadly accepted definition of individual high net worth as having $1M or more in investable assets. Only 23% of survey respondents believe they will ever achieve high net worth status. Just 35% of people are confident they know what net worth means, though 91% say they have heard of it.
74% of people don’t think they’ll ever achieve high net worth status
Gold futures ended lower to log a weekly loss, their first in 3 weeks, pressured by the potential for more aggressive interest-rate hikes by the Federal Reserve to combat rising inflation. Gold for Jun fell $13 (0.7%) to settle at $1934 an ounce, for a 2.1% fall for the week, after back-to-back weekly gains. Gold prices for gold briefly pared their decline immediately after data on Friday showed a rise in the US S&P flash manufacturing PMI to 59.7 in Apr from 58.8 & a drop in the US S&P flash services PMI to 54.7 in Apr from 58.0. Gold prices fell for the week as Treasury yields recently touched their highest levels since late 2018. Treasury yields jumped yesterday, with 10-year yield at 2.909% & 2-year Treasury note at 2.717%, yields hitting levels last seen in Dec 2018 after Federal Reserve Chair Jerome Powell affirmed that a ½ percentage point interest rate hike “is on the table” when policy makers meet in May & signaled the potential for more outsize rate moves ahead. Powell was open to a rapid pace of monetary tightening. “It is appropriate in my view to be moving a little more quickly,” Powell said. “I also think there’s something in the idea of front-end loading,” when moving away from the central bank’s easy-money policy, he added.
Gold prices end lower, post weekly loss of over 2%
Oil prices settled lower, contributing to a more than 4% loss for the week, with China's COVID outbreak & expectations for aggressive interest-rate increases by the Federal Reserve dulling prospects for energy demand. West Texas Intermediate crude for Jun fell $1.72 (1.7%) to settle at $102.07 a barrel on the New York Mercantile Exchange. Prices for the contract were down 4.1% for the week. Jun Brent crude fell $1.68 (1.6%) to $106.65 a barrel, with prices down 4.5% for the week. Oil prices fell today in step with the US stock market. Production outages in Libya had provided some support for prices this week.
Oil prices log a weekly loss of more than 4% as investors ride supply-and-demand seesaw
Dow dropped 1350 in the last 2 days. As said many times previously, investors spoiled on low interest rates for years are scared by what rate hikes will do the economic recovery. If Putin meets with the UN next week, there is hope for a truce in that war. Costs & sanctions could be talking their toll on Putin.
Dow Jones Industrials
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