Dow rose 401 (still below early highs), advancers over decliners 2-1 & NAZ added 132. The MLP index was off 1+ to the 224s & the REIT index rose 4+ to the 364s. Junk bond funds crawled higher & Treasuries were sold, bringing higher yields. Oil advanced 4+ to the 92s & gold surged 61 to 1682 (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)
2 Federal Reserve officials indicated that they expect further interest rate increases but will be looking closely at whether those moves need to be as aggressive as they've been this year. Regional pres Thomas Barkin of Richmond & Susan Collins separately said that the Fed is moving into a new phase that will be examining how much more restrictive policy needs to be. Barkin said the rate hikes have taken policy to where the Fed now has switched from having its foot on the gas pedal to the brake. The new phase means policymakers will “pump the brakes sometimes” & “act a little bit more defensively,” he said. “I’m ready to do that, and I think the implication for that is probably a slower pace of increases, a longer pace of increases and a potentially higher point,” he added. Barkin noted that he could see the fed funds rate — used as a benchmark for short-term borrowing —moving above 5% from its current target range of 3.75-4%. Market pricing today moved higher to a potential “terminal rate” of 5.14%, which would be the highest level since mid-2007. “We need to get inflation down to target and we need to do whatever we need do with rates to get inflation back to target,” Barkin said. “It is entirely conceivable to me, we would end up over 5%. But to me, that’s not a plan, that would be an output of our effort to try to keep inflation under control.” Similarly, Collins stressed the need to attack inflation, while also weighing the impact the Fed's policies are having against easing up on rate hikes too quickly. “Policy has moved expeditiously into restrictive territory, but there is more work to do. In this next phase for policymaking, my focus is shifting from raising rates rapidly to determining the level that the funds rate must reach to be sufficiently restrictive to achieve the desired outcomes,” she said in prepared remarks. “This recognizes that the risks of inflation falling too slowly and of the economy weakening too quickly are becoming more balanced.” Collins is a voting member of the rate-setting Federal Open Markets Committee, but Barkin is not.
Fed officials Barkin and Collins see possibility for slower rate hikes ahead
The head of the ECB underlined the bank's determination to fight rampant inflation with more interest rate increases on top of record hikes, saying that "our job is far from being completed" & that even a mild recession would not be enough to bring rising prices back under control. Pres Christine Lagarde said in a lecture at the central bank of Estonia that "we will not let high inflation become entrenched" by allowing expectations of higher prices to become baked into wages & costs, creating a spiral of ever-higher inflation. She said central bankers must be "prepared to take the necessary decisions, however difficult, to bring inflation back down — because the consequences of letting too-high inflation become entrenched would be much worse for everyone." Lagarde indicated that the rapid pace of increases in the bank’s benchmarks at the Jul, Sep & Oct meetings was not the end of the effort to snuff out inflation that has hit a record 10.7% in the 19 countries that use the euro currency, where the ECB decides monetary policy. Inflation in Estonia & neighboring Latvia & Lithuania is the highest in Europe, running at over 20% & creating added hardship in countries where people spend a higher proportion of their income on food & fuel — 40% compared with 26% in the rest of the eurozone, according to the Latvian central bank. The ECB has raised rates by a total of 2 full percentage points since Jul, the fastest pace since the € was launched in 1999. The bank's stance has mirrored that of the US Federal Reserve, which raised rates by an outsized 3-qtrs of a point for the 4th straight meeting & of the Bank of England, which raised rates the same amount yesterday. Central banks fight inflation by raising their interest rate benchmarks, which guide the cost of credit throughout the economy. Higher rates make credit more expensive, limiting consumption & investment & dampening demand for goods, taking upward pressure off prices. But rate hikes also raise concerns about the impact on economic growth.
ECB president determined to fight inflation, 'our job is far from being completed'
In a last-ditch attempt to persuade voters ahead of the midterms, Pres Biden highlighted his economic record & slammed Reps for
supporting policies that were "reckless and irresponsible." Biden appeared at a rally in Albuquerque, New Mexico, as part of a personal
final-days campaign sprint. "Folks take a look at who's complaining. This there's this I find
fascinating. This I find fascinating," he said. "The people who are
complaining, the MAGA Republicans who sit in Congress had hundreds of
thousands of dollars, even millions of dollars in pandemic relief,
forgiven. But they are now attacking middle class Americans and stood
for who the hell do they think they are?" "Today, we're a much better
place, although people are still hurting. We got more to do. But ten
million jobs created since I take office, that's more than any time with
help in your administration."
Biden clings to economic record in last-ditch midterm push
Gold rose to the highest in nearly 3 weeks as the $ weakened despite a better than expected rise in US jobs in Oct, while bond yields also fell. Gold for Dec closed up $45 at $1676 per ounce, the highest since Oct 13. The rise comes as the $ weakens even after the US reported its economy added 261K new jobs in Oct, better than the 205K consensus estimate, with the better than expected result likely to firm the Federal Reserve's determination to slow the economy as inflation stays high. The Fed's goal is to bring real interest rates into positive territory. This means that the key rate will remain at a high level until such time as the rate of inflation has fallen below it. The ICE $ index was down 1.75 points to 111.19, making gold more affordable for intl buyers. Bond yields were higher amid volatile trade, bearish for gold since it offers no interest. The US 10-year note was up 11.2 basis points to 4.168%.
Gold Rises as the Dollar Falls Despite a Robust US Employment Report
Oil futures rallied, with US oil prices ending at their highest in about 4 weeks, on expectations that China may ease its COVID restrictions. Chinese crude demand has capped & if that roars back, that could send oil prices higher regardless of global economic slowdown fears. If the $ continues to slide, oil's strength cold be substantial. US benchmark West Texas Intermediate crude for Dec rose $4.44 (5%) to settle at $92.61 a barrel. Prices for the front-month contract settled at the highest since Oct 7, up 5.4% for the week.
Oil futures settle higher, with U.S. oil prices topping $90 to end at 4 week high
This was a volatile day. The Dow started with a big gain, but that was lost with heavy midday selling, trimming about all of the advance. Then buying in the last 2 hours enabled the Dow to finish with a respectable gain. After 4 days of trading in Nov, Dow was off 325.Dow Jones Industrials
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