Dow dropped 286, decliners over advancers 2-1 & NAZ was off 111. The MLP index slid back to the 215s & the REIT index fell 3+ to 370. Junk bond funds inched higher & Treasuries were sold, bringing higher yields (more below). Oil rose to almost 79 (more below) & gold was off 3 to 1822.
AMJ (Alerian MLP index tracking fund)
Sen Joe Manchin,
said that the Treasury Dept's decision to delay its
rules on tax credits for electric vehicles "bends to the desires of the
companies looking for loopholes." A measure in the Inflation Reduction Act
added by Manchin required the Treasury Dept to draft rules on the
eligibility of tax credits for electric vehicles by Dec 31. But
the dept announced it will delay this process to Mar, a
decision Manchin called "an unacceptable outcome" as he called for a
pause in the policy's implementation. "The information released today from the Treasury Department
outlining how they will be implementing the commercial and consumer EV tax credits
bends to the desires of the companies looking for loopholes and is
clearly inconsistent with the intent of the law," Manchin said. "It only serves to weaken our ability to become a more energy
secure nation." The policy to be drafted by the Treasury Dept will establish guidelines for $3750 tax credits for electric vehicle
batteries with a majority of manufacturing value in North America and an
additional $3750 credit for batteries with 40% of its mineral values
mined or processed in countries that have a free trade agreement with
the US. Manchin expressed concerns with how the Treasury Dept will be able
to process the new tax credits without established guidelines it was
directed to finalize by the end of the year. He said he will introduce
legislation in the new year that clarifies his measure's intent and
ensures the Treasury Dept follows proper guidelines. The tax credits are essential, Manchin said, to help the US compete with its enemies in a growing industry. "It
is unthinkable that we still depend on China and Russia for the
materials and manufacturing necessary to power our nation in the 21st
century, and I cannot fathom why the Biden administration would issue
guidelines that would ensure we continue on this path," Manchin added.
Manchin slams Treasury Department for delay on electric vehicle tax credits
Treasury yields were lower as investors weighed recession risks & assessed the outlook for Federal Reserve policy in the new year. The yield on the 10-year Treasury was lower by 6 basis points at 3.826% & the 2-year Treasury yield dipped below the flat line to 4.357%. Yields & prices have an inverted relationship. One basis point is equivalent to 0.01%. Yesterday, the Labor Dept reported an increase in jobless claims from last week, amid Federal Reserve efforts to cool the economy & in particular the labor market. First-time filings for unemployment benefits totaled 225K last week. That was an increase of 9K from the previous week & slightly above the 223K estimate. Investors look to economic data releases for clues about the outlook for 2023, as uncertainty over recession prospects & inflation developments have spread. Investors have also been assessing how these factors could affect the Fed's monetary policy decisions, especially regarding interest rates. Many hoping that the central bank will slow, or pause, rate increases in the new year after hiking rates to the highest level in 15 years earlier this month.
Treasury yields fall as investors assess 2023 headwinds, Fed policy outlook
Oil prices traded higher today & were on track to post their 2nd straight annual gains. Oil had a stormy year marked by tight supplies due to the Ukraine war, a strong $ & weakening demand from China. US West Intermediate crude traded around $78 a barrel, on track to rise 4.5% in 2022, following a 55% gain last year. The US oil benchmark reached a 14-year high of $130 per barrel in Mar as Russia invaded Ukraine. The jump in oil prices translated into pain at the pump as the price for a gallon of regular gasoline hit an all-time high of $5.01 on Jun 14. Brent crude futures traded around $82 a barrel. Brent looked set to end the year with a 7.6% gain, after jumping 50.2% in 2021. Prices surged in Mar to a peak of $139. a barrel, a level not seen since 2008. Oil prices cooled as central banks across the world hiked interest rates to fight inflation, boosting the $. That made $-denominated commodities a more costly investment for holders of other currencies. Also, China's zero-COVID restrictions,which were only eased in Dec, squashed oil demand recovery hopes for the world's #2 consumer. While China is expected to slowly recover in 2023, a surge in COVID cases in the country & global recession concerns are clouding the commodities demand outlook.
Oil set to end turbulent 2022 higher
Not much to cheer for investors this year. Hopefully next year will be better.
Dow Jones Industrials
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