Dow shot up 499 (near session highs), advancers over decliners better than 2-1 & NAZ gained 287. The MLP index went up 3+ to 221 & the REIT index soared 10+ to 492. Junk bond funds continued strong & Treasuries dropped taking yields higher again. Oils dropped 5+ to the 102s & gold tumbled 30 to 1935 (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)
Treasury Secretary Janet Yellen blamed the Russian war in Ukraine for a growing crisis over food insecurity & skyrocketing food prices, calling on intl institutes to "deepen their response" to risks of hunger around the world. "The war has made an already dire situation worse," Yellen said during the annual Intl Monetary Fund & World Bank spring meeting "Price and supply shocks are already materializing, adding to global inflationary pressures, creating risks to external balances, and undermining the recovery from the pandemic. I want to be clear: Russia’s actions are responsible for this." The result has been soaring food prices & uncertainty about the future of food security globally, particularly in lower-income nations. The UN's Food & Agriculture Organization Food Price Index, which measures the most globally traded food commodities, hit an all-time high in Mar with the prices of vegetable oils, cereals & meat all surging. A recent report from the group warned that the global number of undernourished people could grow by 8M next year, with 13M people worldwide not having adequate food supplies. The "most pronounced increases" are expected to take place in the Asia-Pacific region, followed by sub-Saharan Africa & the Near East & North Africa. If the war lasts, the UN warned, the effect could last beyond 2023.
Yellen blames Russia-Ukraine war for rising food prices, urges institutions to take 'concrete action'
Ukraine says Russia's full offensive against its eastern Donbas region has begun, with a top official describing it as the “second phase” of the war. The eastern city of Kreminna has fallen to Russian forces, its regional governor said, marking the first city to be captured in this phase of the war. Meanwhile, there are no humanitarian corridors out of the country's embattled east for the 3rd consecutive day. Pres Biden held a secure call with allies to discuss the war & continued support for Ukraine in the White House Situation Room. Just days after announcing an $800M package of US military aid to Ukraine, Pres Biden confirmed that more artillery is on the way. Biden is in Portsmouth, New Hampshire for the day to focus on infrastructure & as he deplaned, he was asked whether he planned to send more artillery to Ukraine. Biden paused & replied, “Yes.” This week marked the first time that the US has sent Ukrainian forces howitzer artillery cannons, heavy weapons that require training to use properly. Yesterday, Pentagon spokesman John Kirby said US service members would train a small number of Ukrainians on how to use the howitzers before sending them into Ukraine.
Ukraine says phase two of the war has begun as Russia begins offensive in the Donbas
US natural gas futures plunged more than 10%, reversing yesterday's surge which saw the contract rally more than 10% at one point to break above $8 per M British thermal units & hit the highest level since 2008. Henry Hub prices declined 10.2% today to trade at $7.02. The May contract is now down roughly 13% from yesterday's high. Natural gas prices have been on a tear since Russia’s invasion of Ukraine in late Feb. The contract is coming off 5 straight weeks of gains & is up nearly 90% for the year. Prices surged yesterday on forecasts for colder spring temperatures, fuel switching from coal to natural gas, as well as the US sending record amounts of LNG to Europe.
Natural gas drops 10%, pulls back from more than 13-year high
As the intl community seeks new ways to increase economic pressure on the Kremlin for its brutal war against Ukraine, the idea of labeling Russia a state sponsor of terrorism has recently gained attention within the Biden administration. Ukrainian Pres Volodymyr Zelenskyy asked Pres Biden to designate Russia a state sponsor of terrorism during a recent phone call between the 2 leaders. Biden didn't commit to Zelenskyy's request. Since then, both State Dept & White House officials have publicly said the US is looking closely at the rules around designating Russia a state sponsor of terrorism. But they have also stressed that the specific sanctions triggered by the state sponsor of terror label, like arms embargoes, trade restrictions & foreign aid suspensions, have already been imposed upon Russia, raising doubts about what the terror designation could actually accomplish at this point. “The sanctions we have in place and have taken are the same steps that would be entailed by the designation of a state sponsor of terrorism,” said State Dept spokesman Ned Price. Nonetheless, he added, “We’ll take a close look at all potential authorities. This is one of them.” The state sponsor of terrorism label is one of the most far reaching sanctions in the US diplomatic arsenal, typically reserved for the worst of the worst -- countries that sponsor non-state actors outside their borders who commit acts of terrorism against civilians. To qualify as a state sponsor of terrorism, a country must have “repeatedly provided support for acts of international terrorism,” according to the State Dept's official description of the law.
U.S. considers labeling Russia a state sponsor of terrorism. Here’s what that means
Gold futures fell, pulling back from the 5-year high it settled at a day earlier to close at its lowest finish in just over a week, as the benchmark $ index reached its highest levels in more than 2 years. Yesterday, Federal Reserve Bank of St. Louis Pres James Bullard said that when it comes to the size of a rate increase, one greater than 50 basis points “is not my base case,” but he noted that the central bank has increased rates by more & wouldn't rule out a potential 75 basis point increase. Chicago Fed Pres Charles Evans, meanwhile, suggested that the Fed's policy interest rate could be raised to as high as 2.5% by year end. Against that backdrop, gold for Jun fell $27 (1.4%) to settle at $1959 an ounce, the lowest most-active contract price finish since Apr 11. Yesterday's close for gold was the highest for a most-active contract since Mar 10, when it ended at a roughly 19-month high of $2000. Gold posted gains in 6 out of the previous 7 sessions, in spite of headwinds from rising Treasury yields & a stronger $. Higher yields raise the opportunity cost of holding nonyielding assets like gold, while a firmer currency makes commodities priced in the unit more expensive to users of other currencies. The $ continued to tick higher today, with the ICE US Dollar Index, which measures it against a basket of 6 major rivals, trading at its highest since Mar 2020. The Japanese ¥ has plunged versus the US unit, with the Bank of Japan largely standing pat on its ultra-easy monetary policy as the Federal Reserve prepares to aggressively raise interest rates & unwind its balance sheet in an effort to rein in inflation. Russia's invasion of Ukraine has been credited with helping to lift gold by enhancing its appeal as a haven during periods of geopolitical uncertainty.
Oil futures fell, pulling back from their highs of the month to settle at their lowest in a week, as traders weighed a Libyan supply outage, China's COVID lockdowns a surging $. West Texas Intermediate crude for May fell $5.65 (5.2%) to settle at $102.56 a barrel. Jun Brent crude, the global benchmark, dropped $5.91 (5.2%) to $107.25 a barrel on ICE Futures Europe. Front-month contracts for both WTI & Brent ended today at their lowest since Apr 12, a day after marking their highest settlement of the month. Oil futures fell today as the $ touched its highest level in 2 years, pressuring commodity prices. Oil was lifted yesterday as news reports said 2 Libyan ports had halted oil loadings as a result of a shutdown of the Sharara oil field, the nation's largest. The move, came amid heightened worries over supply as a result of Russia’s invasion of Ukraine, with European countries weighing plans for an eventual phaseout of Russian energy imports. COVID-19 lockdowns in China, meanwhile, have held the market back. Ukraine said Russia has began a new phase of its invasion by launching a full-scale ground offensive to take control of the country's industrial heartland, the Donbas. The focused attack on the eastern Ukraine region was expected when Russian forces withdrew from the area around the capital Kyiv after being stopped by Ukrainian forces.
Oil futures drop over 5% to settle at their lowest in a week
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