Dow plunged 515, decliners over advancers 7-1 & NAZ dropped 397. The MLP index retreated 9+ to the 204s & the REIT index tumbled 11 to the 433s, close to a 12 month low. Junk bond funds were sold along with stocks & Treasuries saw selling (more below). Oil fell 5 to the 104s & gold sank 22 to 1860.
AMJ (Alerian MLP index tracking fund)
Treasury yields rose amid concerns of surging inflation pressures & slower economic growth. The yield on the benchmark 10-year Treasury note climbed to its highest level since Nov 2018, & was last up 6 basis points at 3.185% while the yield on the 30-year Treasury bond moved 7 basis points higher to 3.293%. Yields move inversely to prices & 1 basis point is equal to 0.01%. The 10-year rate broke above 3% mark at the beginning of last week after the Fed announced its latest monetary policy move. The Fed hiked rates by 50 basis points, but the central bank's efforts to combat rising inflation with more aggressive rate raises has also sparked concerns that this could potentially drag on economic growth. Regarding the war in Ukraine, first lady Jill Biden made a surprise visit to the country yesterday. The US & Group of 7 countries announced that they would increase short-term financial support for Ukraine as the war with Russia nears the 3-month mark.
10-year Treasury yield rises to its highest level since November 2018Minneapolis Federal Reserve Pres Neel Kashkari said he;s confident inflation will come back to normal though it's taking longer than he expected. Acknowledging that he was on “team transitory” in believing that surging prices wouldn't last, he said persistent supply-demand imbalances have generated the highest inflation levels in more than 40 years. While the Fed's monetary policy tools can help tamp down demand, they can't do much to get supply to keep up. “I’m confident we are going to get inflation back down to our 2% target,” he said. “But I am not yet confident on how much of that burden we’re going to have to carry vs. getting help from the supply side.” His comments come less than a week after the interest rate-setting FOMC raised benchmark rates by ½ a percentage point. The 50-basis-point hike was the largest increase in 22 years & sets the stage for a series of similar-sized moves in the months ahead. Though Kashkari historically has favored lower rates & looser monetary policy, he has voted in favor of the 2 increases this year as necessary to control spiraling prices. He noted, though, that the burden from tighter policy will fall on those at the lower end of the wage spectrum. “It’s the lowest-income Americans who are most punished by these climbing prices, and yet your policy tools to tamp down inflation most directly affect those lowest-income Americans as well, either by raising the cost to get a mortgage ... or if we have to do so much that the economy were to go into recession,” he added. “It’s their jobs that are most likely put at risk.” “So this is a difficult challenge I think for all of us, but we also know that letting inflation stay at these very high levels, it’s not good for anybody and it’s not good for the economy’s long-run for potential for anybody across the income distribution,” he continued. On Wed, the gov will release its latest data on consumer prices, followed by Apr producer prices on Thurs. Economists expect the pace of inflation to have eased a bit in Apr, with the headline consumer price index likely to show an 8.1% increase over the past year, & 6% excluding food & energy. That compares to Mar's respective climbs of 8.5% & 6.5%. Those kinds of numbers provide some comfort to Kashkari, though he said conditions remain challenging as long as supply-demand imbalances remain.
Fed’s Neel Kashkari confident inflation can come down, but not without some pain
Pres Vladimir Putin tried to defend Russia's unprovoked invasion of Ukraine in his annual “Victory Day” speech, urging his forces on to victory
while evoking Russia's triumph over Nazi Germany in World War II. Speaking
ahead of a massive parade of troops, tanks & military hardware in
Moscow, Putin claimed Russia's invasion of Ukraine had been necessary
because the West was “preparing for the invasion of our land, including
Crimea.” It's
unclear whether Putin was referring to Russia, or territory that Moscow
considers to be Russian. This includes Crimea, which it annexed from
Ukraine in 2014, & the eastern Donbas region, where Donetsk &
Luhansk — 2 pro-Russian self-proclaimed “republics” — are located.
Putin blames the West for Ukraine war in ‘Victory Day’ speech
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