Dow plunged 824, there are a mere 139 advancers on the NYSE today & NAZ sank 483. The MLP index tumbled 12 to 208 & the REIT index nosedived 18+ to the 393s. Junk bond funds dropped & Treasuries saw massive selling (more below). Oil fell 3 to the 117s & gold retreated 45 to 1829.
AMJ (Alerian MLP index tracking fund)
Short-term rates jumped as the 2-year & 10-year Treasury yield curve briefly inverted for the first time since early Apr. The measure, which is closely monitored by traders, is seen by many as an indicator of a recession. The gap between the 2-year & 10-year yields briefly dipped to as low as minus 0.02 basis points. It comes after Fri's hotter-than-expected inflation reading stoked concerns about an aggressive rate hiking strategy by the Federal Reserve. The 2-year rate was last up a huge 16 basis points at 3.208%, while the benchmark 10-year rate traded roughly 13 basis points higher at 3.284%. Yields move opposite to prices & a basis point is equal to 0.01%. Short-term rates have moved more in the last few days because of their higher sensitivity to Federal Reserve rate hikes, flattening the widely watched yield curve. A highly anticipated Federal Reserve meeting comes this week, with the central bank expected to announce at least a ½-point rate hike on Wed. The Fed has already raised rates twice this year, including a 50-basis-point (0.5 percentage point) increase in May in an effort to stave off the recent inflation surge. Last week, the US consumer price index, a closely watched inflation gauge, rose by 8.6% in May on a year-over-year basis, its fastest increase since 1981, the Bureau of Labor Statistics reported. The forecast expected a gain of 8.3%. Meanwhile, the University of Michigan consumer sentiment reading fell to a record low, appearing to accelerate the selling in bonds at the end of last week.
2-year Treasury yield briefly tops 10-year rate, its first inversion since early April
Global stock markets are falling sharply after May's US inflation print reignited fears that central banks will be forced into aggressive monetary policy tightening. Fri's highly-anticipated consumer price index (CPI) report came in hotter than expected at 8.6% annually, resurfacing market concerns that action from the Federal Reserve & other central banks could risk tipping the economy into recession. Central to the adverse market reaction to the CPI reading is the fear that inflation expectations have broadened & become entrenched, beyond the well-documented ephemeral drivers such as supply chain bottlenecks & energy shocks. Major averages in the US closed out their biggest weekly declines since Jan. Shares in Asia-Pacific plunged today, with Hong Kong's Hang Seng index, Japan's Nikkei 225 & South Korea's Kospi all falling more than 3%. European stocks also tumbled, with the pan-European Stoxx 600 shedding 2% as a sea of red swept thru global risk assets.
Global markets are tanking ahead of a huge week for central banks
Russia & China announced the opening of a new bridge with "special
symbolic meaning" Fri in hopes of bolstering trade as Moscow
continues to feel the effects of sanctions imposed by the west over its nvasion of Ukraine. The
bridge now linking Blagoveshchensk, Russia, to Heihe, China, over the
Amur river will slash the travel distance of Chinese goods into western
Russia by 930 miles, giving a boost to trade flow with Beijing that
Moscow believes will grow to $200B by 2024. "In today's divided world, the Blagoveshchensk-Heihe
bridge between Russia and China carries a special symbolic meaning,"
the Kremlin representative in the Russian Far East, was
quoted. China, which buys Russian natural resources & agricultural goods, has criticized Western sanctions on Moscow. The bridge reportedly took around 4 years and $342M to construct.
Russia, China open bridge to boost trade as Moscow grapples with Ukraine sanctions
Dow is where it was it the start of 2021 & that was in a rising market! There is not much to say during today's free for all in the stock market. This is an unusually brutal decline when even safe have gold is being hit with heavy selling.
Dow Jones Industrials
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