Dow tumbled 876 (close to session lows), only 185 stocks are the NYSE up today & NAZ dropped 530. The MLP index sank 12+ to the 207s & the REIT index slumped a staggering 20 to the 391s. Junk bond funds saw significant selling & Treasuries continued to be sold with the yield on the 10 year Treasury up a staggering 21 basis points to 2.37%. Oil was flattish near 121 & gold was still down 50 at 1825 at the close (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
US consumers ratcheted up their outlook for where inflation will be one year from now, according to a key Federal Reserve Bank of New York survey, a potentially worrisome sign for the central bank as it tries to tame white-hot prices. The median expectation is that the inflation rate will be up 6.6% one year from now, matching an 11-year-high recorded in Mar, according to the New York Federal Reserve's Survey of Consumer Expectations, which dates back to 2013. 3 years from now, consumers see inflation hitting 3.9% – unchanged from last month. "Median inflation uncertainty — or the uncertainty expressed regarding future inflation outcomes — retreated at the short-term horizon from a series high in May," the report added. "In contrast, median inflation uncertainty increased to a new series high at the medium-term horizon." Although consumers lifted their expectations for inflation over the next year, they believe that things like food, medical care, rent & tuition will fall over the next year. But they expect that gas prices – which have climbed consecutively higher over the past month, hitting a national average of $5 per gallon for the first time ever – to continue to rise. The report is based on a rotating panel of 1300 households. The survey plays a critical role in determining how Fed policymakers respond to the inflation spike. That's because actual inflation depends, at least in part, on what consumers think it will be. It's a sort of self-fulfilling prophecy – if everyone expects prices to rise by 3% in the year, that signals to businesses that they can increase prices by at least 3%. Workers, in turn, will want a 3% pay raise to offset the rising costs.
Americans' inflation expectations jumped to another 11-year high
UK Covid-19 cases have risen for the first time in 2 months, according to new data, which warns of a possible further spike ahead. A total of 990K people tested positive for the virus in the week in May 27 - Jun 2 — up from 954K a week earlier — estimates from the UK's Office for National Statistics (ONS) showed Fri. That figure equates to around 1.5% of the population, or one in 65 people. It comes at a time when Health Secretary Sajid Javid has dubbed the country “properly post-pandemic.” Javid said on Sat that Covid-19 was “no longer a pandemic,” describing it as “endemic” like the flu & other viruses. “We should be proud as a country of how we tackled it,” he added. The uptick recorded by the ONS was likely driven by the original omicron variant BA.1 & the newer variants BA.4 & BA.5. While all 4 countries in the UK recorded an increase in cases, the ONS said the overall trends in Scotland & Wales were “uncertain.” As of Jun 2, England had 797K; Northern Ireland had 27K; Wales had 40K & Scotland had 124K. The data, which are based on confirmed positive Covid-19 test results of those living in private households, give an early projection of the course the virus may take in the coming weeks. It is compiled by testing thousands of people from UK households at random, whether or not they have symptoms & is thought to provide the clearest picture of Covid-19 infections in Britain since free public testing was abandoned in England & Scotland. Some health researchers & physicians have warned that the uptick suggests a new wave of infections is coming.
Far from being ‘post pandemic,’ UK Covid cases are on the rise again
Mortgage interest rates increased last week after several consecutive weeks of decreases, according to the latest data from Freddie Mac. The 30-year fixed-rate mortgage increased to 5.23% for the week ending Jun 9, according to Freddie Mac's Primary Mortgage Market Survey. This is up from the week before when it averaged 5.09% & up from 2.96% last year. Similarly, the 15-year mortgage increased to 4.38%, up from 4.32% the week before & 2.23% last year. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) also increased to 4.12%, up from 4.04% the previous week & 2.55% last year. "After little movement the last few weeks, mortgage rates rose again on the back of increased economic activity and incoming inflation data," Freddie Mac Chief Economist Sam Khater said. Home prices have risen to record highs, increasing 20.6% annually in Mar according to the latest Case-Shiller report. This marked the strongest increase in the history of the report. "Mortgages are becoming more expensive as the Federal Reserve has begun to ratchet up interest rates, suggesting that the macroeconomic environment may not support extraordinary home price growth for much longer," S&P Dow Jones Indices Managing Director Craig Lazzara said at the time of the report. "Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call." Other experts agreed that rising rates could soon begin to cool rapid home price growth. "The housing market is incredibly rate-sensitive, so as mortgage rates increase suddenly, demand again is pulling back," Khater added. "The material decline in purchase activity, combined with the rising supply of homes for sale, will cause a deceleration in price growth to more normal levels, providing some relief for buyers still interested in purchasing a home."
Mortgage rates increase for the first time in weeks
Gold futures declined, with prices marking their lowest settlement in more than 3 weeks despite a global equity market selloff as strength in the $ outshined the yellow metal's appeal as a haven investment. Gold for Aug fell $43 (2.3%) to settle at $1831 an ounce. Prices based on the most-active contract settled at the lowest since May 18. Gold had seen prices rise on Fri as stocks & other assets perceived as risky came under pressure following data that showed the US consumer-price index rose at a 40-year high of 8.6% year-over-year in May, defying expectations of investors looking for evidence that inflation had peaked. The reading is seen prompting the Federal Reserve to move even more aggressively than expected to tighten monetary policy in an effort to get inflation under control, risking a recession. The Fed is widely expected to deliver a rate hike of 50 basis points (½ a percentage point) when it concludes a 2-day policy meeting on Wed. Meanwhile, strength in the $, as global equities continued to fall, put pressure on $-denominated gold prices. Treasury yields were also on the rise, raising the opportunity cost of holding nonyielding assets like gold. The ICE US Dollar Index was up 0.7%, trading near a 20-year high.
Gold logs lowest finish in more than 3 weeks as U.S. dollar’s jump outshines haven appeal
Oil futures ended higher, with prices scoring their first gain in 3 sessions after a renewed rise in COVID-19 cases in China & last week’s hotter-than-expected US inflation reading pulled prices to their lowest intraday level in almost a week. West Texas Intermediate (WTI) crude for Jul rose 26¢ to settle at $120.93 a barrel a barrel after touching an intraday low of $117.47. Aug Brent crude the global benchmark, added 26¢ to $122.27 a barrel after a $118.93 low. WTI & Brent touched their lowest intraday levels today since Jun 7. Prices for both benchmarks hit 3-month highs last week. Libya's oil production has been nearly halted due to political protests, with output down by about 1.1M barrels a day, from an average of 1.2M barrels a day last year according to Libyan Oil Minister Mohamed Oun. Meanwhile, Pres Biden is expected to announced a trip next month to Saudi Arabia leading to speculation that maybe the Saudis could add more barrels. A renewed surge by the $ on expectations for the Federal Reserve to ramp up its aggressive monetary tightening efforts was a headwind for crude and other commodities priced in the unit. A stronger $ makes them more expensive to users of other currencies. The ICE US dollar index was up 0.8%.
Oil ends higher after China COVID worries send prices to lowest intraday level in nearly a week
This was another brutal day for stocks. That phrase has become more common, especially in 2022. The story remains the same. Interest rates will be raised, perhaps substantially. Inflation will continue to be elevated for months, led by oil which is not far from record high prices. Oil is a commodity & subject to large price swings. But over the short term, it has substantial following winds & that worries all investors. Today there was bargain hunting in the PM, but that faded in the last hour of trading.
Dow Jones Industrials
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