Dow dropped 121 after opening 500 higher, decliners barely ahead of advancers & NAZ was off 36. The MLP index was steady in the 202s after a big decline yesterday & the REIT index dropped 5+ to the 418s, near a 1 year low. Junk bond funds fluctuated & Treasuries were heavily purchased, taking the yield on the 10 year Treasury down 12 basis points to 2.95% (more below). Oil fell 1+ to the 101s & gold declined 12 to 1846.
AMJ (Alerian MLP index tracking fund)
Small business confidence hovered near a 2-year low in Apr, with the most owners since 1981 reporting that sky-high inflation was their single most important problem, a survey showed. The National Federation of Independent Businesses (NFIB), an association of small business owners, said its Small Business Optimism Index held steady at 93.2 last month, the 4th straight month of readings below the 48-year average of 98. It marks the first time this year the index has not declined. Still, the outlook remains dark for many small businesses, with the percentage of owners expecting better business conditions over the next 6 months falling to the lowest level recorded in the 48-year-old survey. The biggest problem, according to the survey, is inflation: 32% of small business owners reported that rising prices are their single most important problem in operating their business, the highest reading since 1980. "Small business owners are struggling to deal with inflation pressures," NFIB chief economist Bill Dunkelberg said. "The labor supply is not responding strongly to small businesses’ high wage offers and the impact of inflation has significantly disrupted business operations." Businesses also struggled to onboard new employees, with nearly ½ of owners – 47% – reporting that they could not fill open jobs. The Labor Dept reported last week that there were 11.5M open jobs at the end of Mar, the highest on record. The number of available jobs has topped 10M for 8 consecutive months; before the pandemic began in Feb 2020, the highest on record was 7.7M. Of the small businesses trying to hire new workers, a stunning 93% reported that few or no qualified individuals applied for the position they were trying to fill. American consumers are grappling with the hottest inflation in a generation, with the consumer price index climbing 8.5% in Apr from a year ago, marking the fastest increase since 1981. The CPI – which measures a bevy of goods, ranging from gasoline & health care to groceries & rents – jumped 1.2% in the one-month period from Mar.
Small business confidence tanks as labor shortage, inflation spike
Gasoline prices surged to the highest level on record as oil holds steady above $100 a barrel, contributing to inflationary pressures across the economy. The national average for a regular gallon of gas hit an all-time high of $4.37 (not adjusted for inflation). Prices have been rising at a fast clip, with the ascent accelerating after Russia invaded Ukraine, sending energy markets reeling. The national average crossed above $4 in Mar for the first time since 2008 & has remained above ever since. Consumers are now paying $1.41 more at the pump than last year. In some places, the move is far more extreme. In California, the state average now stands at $5.84. A handful of counties in the state have topped $6. Diesel prices, meantime, are also surging. The national average hit $5.55 per gallon, also a record. Prices have hit a new high for at least the past 7 days. West Texas Intermediate crude futures, the US oil benchmark, traded around $101.66 per barrel yesterday. That's significantly off its recent high around $130 per barrel in Mar. But while oil accounts for more than 50% of the cost per a gallon of gas, it’s not the only factor. The industry is grappling with the same pressures playing out in the rest of the economy, including labor constraints. Refiners, which turn oil into everyday products including gasoline & jet fuel, are running near maximum capacity. The US refining capacity has declined over the last few years & now Europe is competing for the same petroleum products as it seeks to move away from Russian energy.
Gas prices hit new nominal record of $4.37 a gallon as inflation fears mount
The 10-year Treasury yield fell today, dipping below the 3% mark as fears of rising inflation & a potential economic slowdown lingered. The yield on the benchmark 10-year Treasury note fell to 2.96% & the yield on the 30-year Treasury bond moved 11 basis points lower to 3.1%. Yields move inversely to prices & 1 basis point is equal to 0.01%. The 10-year rate hit 3.17% early yesterday, its highest level since 2018. Global stock markets also experienced a sell-off in the previous session, with the US S&P 500 falling to its lowest level in more than a year. The volatility in both markets in recent days has come on the back of the Federal Reserve’s latest policy decision, with the central bank announcing it was hiking interest rates by 50 basis points. That was in line with market expectations & less than the 75-basis-point hike feared by some. However, investors remain concerned that more aggressive policy moves by the central bank could add to a potential drag on the economy, with inflation soaring. Russia's invasion of Ukraine also remains in focus for investors. Pres Biden yesterday pressed Congress to “immediately” pass a major aid package for Ukraine.
10-year Treasury yield dips below 3%
Dow Jones Industrials
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