Dow jumped 447, advancers over decliners 5-1 & NAZ advanced 390. The MLP index gained 6+ to the 205s & the REIT index recovered 7+ to the 426s. Junk bond funds rose along with stocks & Treasuries were heavily sold, rasing the yield on the 10 year Treasury 11 basis points to 2.92%. Oil shot up 3+ to the 109s & gold fell 10 to 1813.
AMJ (Alerian MLP index tracking fund)
Federal Reserve Chair Jerome Powell was confirmed by the Senate for a 2nd term heading the central bank & guiding US monetary policy. Job one remains getting a handle on inflation, which is at a 40-year high. Last week, the Federal Reserve raised its benchmark interest rate by a ½ point for the first time in 2 decades as policymakers intensified their fight to cool red-hot inflation, a move that threatens to slow US economic growth & exacerbate financial pressure on Americans. The Fed's target for inflation has always been around 2%. Powell admitted the task of getting back to that point will not be easy, but he said it must be done. "The process of getting inflation down to 2% will also include some pain, but ultimately the most painful thing would be if we were to fail to deal with it and inflation were to get entrenched in the economy at high levels, and we know what that’s like," Powell said "And that’s just people losing the value of their paycheck to high inflation and, ultimately, we’d have to go through a much deeper downturn. And so we really need to avoid that." The Labor Dept reported yesterday that average hourly earnings for all employees actually declined 2.6% in Apr from the same month a year ago when factoring in the impact of rising consumer prices. More interest rate hikes are expected at upcoming meetings.
Powell: Failing on inflation means deeper downturn
Treasury prices slipped & yields jumped as investors sold out of gov bonds & looked to move back into stock markets. The yield on the benchmark 10-year Treasury note surged 9 basis points to 2.909% & the yield on the 30-year Treasury bond climbed roughly 9 basis points to 3.056%. Yields move inversely to prices & 1 basis point is equal to 0.01%. Stocks jumped as the markets looked to avoid falling into bear territory following heavy selling in recent days. Throughout the week, investors appear to have rotated out of stocks & into Treasuries in search of a safe haven, as persistently high inflation data has fueled recession fears. Federal Reserve Pres Jerome Powell said that he couldn’t guarantee a “soft landing” for the economy, despite the central bank’s efforts to control inflation.
U.S. Treasury prices slip as investors pile back into stocks
Ukrainian Pres Volodymyr Zelenskyy said Russia’s strategic defeat is “already obvious,” accusing the Kremlin’s forces of trying to hide the truth with missle, air & artillery strikes. His comments come as Russia is seen investing “significant effort” around the cities of Izium & Severodonetsk in a bid to achieve a breakthrough in eastern Ukraine, according to UK military intelligence. A Russian soldier is due to stand trial for killing an unarmed Ukrainian citizen. It marks the first alleged war crime since Russia's invasion of Ukraine began. Meanwhile, top diplomats from the Group of Seven (G-7) wealthy nations gathered in northern Germany for a 3-day meeting centered on Russia's invasion. Turkish Pres Recep Tayyip Erdogan has voiced opposition to Sweden & Finland's potential NATO membership, just as both countries are on the verge of applying to join the alliance in the wake of Russia's invasion of Ukraine. “We are following the developments regarding Sweden and Finland, but we don’t hold positive views ... It is not possible for us to be in favor,” Erdogan said. He cited the Nordic countries' relations with Kurdish militant groups that Ankara classifies as terrorists.NATO ascension for a new member state requires consensus approval from all existing members. Turkey joined NATO in 1952 & has the 2nd-largest military in the 30-member alliance after the US.
Russia investing ‘significant effort’ in eastern offensive; Zelenskyy says Kremlin defeat is obvious
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