Dow gained 138, advancers over decliners about 2-1 & NAZ jumped 158. The MLP index was steady at 226 & the REIT index fell 4+ to the 367s. Junk bond funds crawled higher & Treasuries saw very limited buying (more below). Oil was flat in the 83s & gold advanced 25 to 2049.
AMJ (Alerian MLP Index tracking fund)
Inflation at the wholesale level posted another surprise decline in
Mar, the latest sign that painfully high consumer prices are beginning
to loosen their stranglehold on the US economy. The Labor Dept said that its producer price index, which measures inflation at the wholesale level before it reaches consumers, fell 0.5% in Mar from the previous month. On an annual basis, prices are up 2.7%. Those
figures are both lower than the 3% headline increase & 0% monthly
figure forecast, a welcome sign for the Federal Reserve as the central bank seeks to cool price gains & tame consumer
demand with the most aggressive interest rate hike campaign since the
1980s. There are still signs of inflationary pressures in the economy, however. Excluding the more volatile measurements of food & energy,
core inflation rose 0.3% for the month, unchanged from the
0.3% gain in Feb. The reading was up 4.3% on a 12-month basis, down
slightly from the previous month. The data comes a day after the Labor Dept reported that the consumer price index,
which measures the prices paid directly by consumers, rose 0.1% in
Mar, slightly less than expected. The annual inflation rate also came
in lower than expected at 5%. Both releases are considered to be important measurements of inflation,
with the PPI is believed to be a leading indicator of inflationary
pressures as costs work their way down to consumers. The different
gauges point to inflation that is still running well above the Fed's
preferred 2% target, a troubling sign as the central bank has already
raised interest rates nine straight times. The sharp decline in the monthly number largely stemmed from a 6.4% drop
in energy prices, including an 11.7% drop in the cost of gasoline. The
price of diesel fuel, residential natural gas, jet fuel, electric power & fresh & dry vegetables also fell last month. However, the cost of
chicken eggs & meats inched higher.
Wholesale inflation sees another surprise decline
Treasury yields slipped as investors digested the Mar producer prices index that came in cooler than expected. The yield on the benchmark 10-year Treasury note fell 3 basis points to 3.391% & the 2-year Treasury yield fell about 5 basis points & was last trading at 3.924%. Yields & prices move in opposite directions and one basis point equals 0.01%. The Mar producer prices index, a measure of prices paid by companies & often a leading indicator of consumer inflation, showed a 0.5% decline month over month, compared to expectations it would be flat. Excluding food & energy, the core wholesale prices reading shed 0.1% month over month, much better than the 0.2% increase forecast. The data is likely to influence the Fed's next policy moves. After its last meeting, the central bank indicated that, depending on economic data, interest rate hikes may be paused soon. Many investors are, however, expecting a further 25 basis point rate hike at the conclusion of the Fed's May meeting.
Treasury yields decline as wholesale prices fall in March
The most pressing issue in Congress' upcoming legislative session must be passing a debt limit bill & averting a default, Rep Study Committee Chair Kevin Hern wrote in a letter to colleagues today. "Passage of a strong debt limit bill before the end of the Apr legislative session must be the chamber’s top priority," Hern wrote, which includes about 80% of Reps in the House. "We must work night and day to get it passed to show the American people we can be trusted and force the Senate and White House to answer for their dereliction of duty." The GOP has been locked in a stalemate with the White House & Dems over the $31.4T debt ceiling, which the US bumped up against earlier this year. The Treasury Dept began using "extraordinary measures" in Jan to avoid defaulting on the national debt, but the federal gov is expected to run out of cash as early as Jul unless the debt ceiling is raised. The White House is pushing a clean increase in the debt ceiling without any conditions, while Reps want cuts to gov spending in exchange for the increase. The Rep Study Committee released a "Debt Limit Playbook" last month that lays out the GOP's priorities, including reversing recent increases in discretionary spending; freeing up domestic energy capacity by reducing regulatory barriers; examining ways to fight gov waste; & establishing "a long-term fiscal control" to restrain the growth of the national debt. House Speaker Kevin McCarthy said that Reps may move forward with their own debt limit bill if Dems refuse to negotiate. "We cannot solve the nation’s fiscal problems overnight, and House Republicans are not demanding we do so," McCarthy wrote in a letter to Biden last month. "But we cannot continue to kick the can down the road and ignore America’s ballooning national debt, all while you continue to spend trillions more, including through unaccountable executive fiat."
House Republican leader says debt limit vote must be GOP's top priority
Today's inflation data shows improvement going foward. But the fight to control inflation is not over. For example, West Texas Intermediate (the price of oil at the well) is rising again & it will be hitting retailers soon. Negative investors keep buying gold which is approaching its record highs.
Dow Jones Industrials
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