Dow gained 260, advancers over decliners 4-1 & NAZ went up 141. The MLP index was up 1+ to the 205s & the REIT index went up to to the 437s. Junk bond funds rose in price & Treasuries were also purchased, reducing yields (more below). Oil was higher in the 89s & gold added 12 to 1803.
AMJ (Alerian MLP index tracking fund)
Federal Reserve Bank of San Francisco Pres Mary Daly yesterday said the central bank will "absolutely" raise interest rates ½ a % in Sep to try to bring down red-hot inflation. She said Americans are struggling as inflation hits 9.1% – the highest since 1981 – while wage growth is not rising at as fast a rate. "Americans are losing ground every day, so the focus has to be on bringing inflation down," Daly added. The potential rate hike comes as the economy is teetering on the brink of a recession. The Commerce Dept reported last week that the GDP shrank by 0.9% in Q2 after tumbling 1.9% over the year's first 3 months. However, Daly said that she doesn't see that inflation is embedded in the economy, which she says has shown signs of cooling. "What I see is supply and demand are just unbalanced. About 50%, by my own staff’s estimates, of the excess inflation we see is related to demand, the other 50% to supply," she noted. Daly said that she believes the Fed is in a great position to bring demand down & that they already see signs of cooling forming in the housing market & in investments. "So I do see signs the economy is cooling, it’s just going to take some time for the interest rate adjustments we’ve made to work their way through," Daly continued. "And we’re far from done yet, that’s our promise to the American people."
SF Fed president predicts central bank's next move
Treasury yields fell after unexpectedly robust jobs data increased the likelihood of aggressive rate hikes by the Federal Reserve. The yield on the benchmark 10-year Treasury note fell 4 basis points to about 2.7993%, while the yield on the 30-year Treasury bond was down 2 basis points to 3.0383%. Yields move inversely to prices & a basis point is equal to 0.01%. That comes after economic data published Fri showed that US job growth blew past expectations in Jul. The data showed nonfarm payrolls rose 528K last month & surpassed expectations of 258K. At the same time, wage growth increased, with average earnings climbing 0.5% for the month & 5.2% over last year. The stronger-than-expected report boosted the prospect of aggressive rate hikes by the Federal Reserve & showed that the US is likely not in a recession. Analysts expect the Fed to consider a 75-basis point rate hike at its coming meetings to bring soaring inflation down to its goal.
U.S. Treasury yields fall as investors weigh Fed rate hike outlook
Senate Dems narrowly passed a sweeping climate & economic package yesterday, putting Pres Biden & his party on the cusp of a big legislative victory just 3 months before the crucial Nov midterm elections. After a marathon overnight Senate session, the 51-50 vote was strictly along party lines, with all Reps voting no & all Dems voting yes. The legislation, dubbed the Inflation Reduction Act, now heads to the House, which plans to return from its summer recess on Fri, pass the legislation & send it to Biden's desk for his signature. The 755-page bill includes $430B to combat climate change & extend health care coverage, paid for with savings on prescription drugs & taxes on corps. It puts hundreds of Bs of $s toward deficit reduction.
Senate passes sweeping climate, health and tax package, putting Democrats on cusp of historic win
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