Dow slipped back 163, decliners over advancers 5-4 & NAZ went up 49. The MLP index remained steady in the 224s & the REIT index was about even in the 367s. Junk bond funds fluctuated & Treasuries had limited buying, reducing yields slightly (more below). Oil bounced back to the 68s & gold was off 7 to 1916.
AMJ (Alerian MLP Index tracking fund)
Federal Reserve Chair Jerome Powell talked tough on inflation again, saying at a forum that he expects multiple interest rate increases ahead & possibly at an aggressive pace. “We believe there’s more restriction coming,” Powell said. “What’s really driving it ... is a very strong labor market.” The comments reiterate a position taken by Powell's fellow policymakers at their Jun meeting, during which they indicated the likelihood of another ½ percentage point of increases thru the end of 2023. Assuming a ¼-point per meeting, that would mean 2 more increases. Previous comments from Powell pointed to a possibility of the hikes coming at alternate meetings, though he said today that might not be the case depending on how the data come in. The Fed hiked at each meeting since Mar 2022, a span that included 4 straight 3-qtr point moves, before taking a break in Jun. “I wouldn’t take, you know, moving at consecutive meetings off the table,” he added. Central to the Fed's current thinking is the belief that the 10 straight rate hikes haven't had time to work their way thru the economy. Therefore, officials can't be sure whether policy meets the “sufficiently restrictive” standard to bring inflation down to the Fed's 2% target. Most economists think the rate hikes ultimately will pull the US into at least a shallow recession. “There’s a significant possibility that there will be a downturn,” Powell said, adding that it’s not “the most likely case, but it’s certainly possible.”
Powell says more ‘restriction’ is coming, including possibility of hikes at consecutive meetings
Drugmakers are jockeying to capitalize on the next major innovation coming to the blockbuster weight loss industry: effective, convenient & potentially affordable obesity pills. An estimated 40% of US adults are obese, making a successful pill a massive opportunity. For now, one experimental oral drug from Eli Lilly (LLY) appears to have an edge over pills from Novo Nordisk (NVO) & Pfizer (PFE) – even though it may not win US approval first. All 3 manufacturers are developing oral versions of GLP-1s, a class of drug that mimics a hormone produced in the gut to suppress a person's appetite. Novo Nordisk’s popular Wegovy & Ozempic treatments, which sparked a weight loss industry gold rush last year, are weekly GLP-1 injections also known as semaglutide. The pills are easier to manufacture than injections, which come in the form of single-use pens. That means the oral drugs could potentially help alleviate the supply shortages plaguing their injectable counterparts. Pills are also typically cheaper than injections, though it’s unclear if that will be the case with the obesity pills. None of the 3 drugmakers have provided estimates for how much the new obesity pills would cost. But analysts are confident in the competitive edge of orforglipron in the long run, especially after LLY unveiled phase 2 clinical trial results last week that showcased the drug’s strong efficacy profile. LLY stock fell 1.38.
If you would like to learn more about LLY, click on this link:
club.ino.com/trend/analysis/stock/LLY_aid=CD3289&a_bid=6aeoso5b6f7
As drugmakers race to develop the next big weight loss pill, Eli Lilly may have an edge
Treasury yields fell as investors considered the path ahead for interest rates & awaited fresh comments from Federal Reserve Chair Jerome Powell at the ECB Forum on Central Banking today (see above). The 10-year Treasury yield was down about 2 basis points at 3.75% & the 2-year Treasury yield was last trading at 4.747% after falling by nearly 2 basis points. Yields & prices have an inverted relationship & one basis point equals 0.01%. Chiefs from the Bank of England, European Central Bank & Bank of Japan will join Powell. Investors are hoping to gain fresh insights into what policymakers expect for interest rates & inflation going forward. The central banks have taken varying approaches to their interest rate policies recently. The Fed & Bank of Japan chose to keep rates steady, while the Bank of England & ECB increased interest rates by 50 & 25 basis points respectively. Powell has recently indicated that further interest rate hikes are expected in the US as the central bank's policy goals of easing the economy & cooling inflation have not yet been fully reached. This comes as economic data has reflected resilience in the economy & has prompted markets to price in another rate hike when the Fed meets in Jul.
Treasury yields dip as investors weigh interest rate outlook
Dow Jones Industrials
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