Dow finished up 84 believe it or not, decliners over advancers about 2-1 & NAZ was up a big 201. The MLP index index fell 2+ to the 203s & the REIT plunged 11+ to 450 (above earlier lows). .Junk bond funds dribbled lower & Treasuries were hit with heavy selling ahead of the Fed meeting on Wed (more below). Oil futures settled at $105.17 a barrel, up 48¢ (0.5%) & gold finished down 49 to 1861 (more 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 yields continued their push higher today, as investors monitored economic data & monetary policy on the first trading day of May. The yield on the benchmark 10-year Treasury note rose more than 11 basis points to 3% in midday trading & the yield on the 30-year Treasury bond jumped more than 11 basis points to 3.062%. Yields move inversely to prices & 1 basis point is equal to 0.01%. The 10-year’s move put the yield at its highest level since Dec 3, 2018. The benchmark yield has risen rapidly this year after ending 2021 near 1.5%. It was trading near 2.33% at the end of Mar.
10-year Treasury yield tops 3% for first time since 2018
The Federal Reserve is hiking interest rates in an effort to defuse an explosive year of price inflation. But global forces could neutralize the effects of that tightening of monetary policy & keep inflation high. Some observers believe the US gov may have misread the looming threat of inflation. During the pandemic, the US dispersed historic sums of cash to blunt widespread economic damage. Analysts say this stimulus produced strong household savings . A boom in demand for durable goods followed. This surge in demand came as global supply chains stalled out & a persistent bout of inflation followed. In Mar 2022, prices across all categories rose to historic levels, 8.5% year over year. And investors believe the price hikes aren't over yet, according to a New York Federal Reserve survey. “The only way to break the back of inflation that’s running out of control is for very tight monetary policy, ” says Richard Fisher, former Pres of the Federal Reserve Bank of Dallas. “It slows things down because everything becomes expensive.” Today's inflation isn’t spiraling in the way it did in the recent past, however. From 1965 to 1982, inflation soared, at times reaching double-digit rates. In 1979, the central bank, under Chair Paul Volcker, kicked off a tightening cycle that resulted in interest rates of nearly 20%. Strong monetary policies killed inflation, but also led companies to offshore labor costs. As a result, American workers saw their labor income stagnate relative to productivity for 4 decades. This period in US economic history is remembered for stagflation, which describes the duel threat of stagnant growth & persistent inflation. Today's Federal Reserve leaders hope to avoid such a dramatic turn of events. But their plan could backfire, as many of the root causes of inflation are outside of the bank's control.
Stagflation risk rises as the Federal Reserve tightens monetary policy
Global shares fell today & oil prices lost about $3 a barrel as European energy ministers were set to meet to discuss Russian supply issues & sanctions. Trading was closed for holidays in China, many other Asian markets & Britain. The CAC 40 in Paris dropped 1.7% in early trading to 6420 & Germany's DAX was down nearly 1.0% at 13,963. A report showing pandemic lockdowns have hurt factory activity in China, a main regional driver of growth, was a fresh source of concern. The monthly purchasing managers' index, released over the weekend by China's National Bureau of Statistics, fell to 47.4 in Apr, down from 49.5 in Mar on a 100-point scale. Numbers below 50 show activity contracting. The COVID-19 outbreaks have impacted China’s factory activities & market demand, said the bureau. Some enterprises have reduced or stopped production, with disruptions in logistics as well as the supply or raw materials & components. Residents of Shanghai, China's most populous city, spent most of Apr under lockdown. The capital, Beijing, is mass-testing Ms of residents. Japan's benchmark Nikkei 225 declined 0.1% to finish at 26,818 & trading will be closed tomorrow thru Thurs for national holidays, reopening on Fri. Australia's S&P/ASX 200 dropped 1.2% to 7,347 & South Korea's Kospi shed 0.3% to 2687. In Ukraine, a first group of civilians who had been trapped for weeks inside a steel plant in Mariupol under Russian siege was expected to reach a Ukrainian-controlled city later Mon. The EU energy ministers were to meet to discuss Russia's decision to cut gas supplies to Bulgaria & Poland & debate a sixth round of sanctions over Moscow's war on Ukraine. The energy ministers were also planning to look at what steps to take if Russia ramps up its pressure by cutting gas supplies to other countries.
EU moves forward in antitrust case against tech giant
Gold futures finished sharply lower today, recording their sharpest daily decline in about 2 months, while building on an Apr retreat that left the precious metal with its worst monthly performance since Sep. Gold for Jun fell $27 (2.5%) to settle at $1863 an ounce, the biggest daily percentage decline since Mar 9 when the most-active gold contract fell 2.7%. A surging $ was blamed in part for a 2.1% Apr fall, the largest in 7 months. The ICE US Doll, a measure of the currency against a basket of 6 major rivals, was up 0.8%, trading near highs last week that marked its strongest in more than 7 years. A stronger $ can be a weight on commodities priced in the unit, making them more expensive to users of other currencies. Treasury yields, meanwhile, continued to rise, which raises the opportunity cost of holding assets that don't offer a yield. The 10-year Treasury rate briefly hit 3% today, its highest since 2018. Both the $ & bond yields have been lifted by expectations the Federal Reserve will move aggressively in an attempt to rein in inflation running its hottest in more than 4 decades.
Gold books worst day in 2 months, after suffering biggest monthly loss since September
This was not a good day for the timid. The Dow edged higher in early trading. Around midday selling was prominent, taking it 800 below its early high. Then buyers in the last hour took it back into the black. The Fed meeting at midweek is on everybody's minds along with earnings (which have been only so-so). This week has the makings of another wild week for stocks with dark clouds in the sky.
Dow Jones Industrials
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