Dow soared 284. advancers over decliners an impressive 5-1 & NAZ went up 178. The MLP index was fractionally higher to the 234s & the REIT index gained 3+ to the 384s. Junk bond funds drifted sideways & Treasuries were in heavy demand, taking yields lower. Oil was up another 1+ to about 76 & gold added 23 to 1960 after recent weakness.
AMJ (Alerian MLP Index tracking fund)
The Labor Dept said that the consumer price index, a broad measure of the price for everyday goods including gasoline, groceries & rents, rose 0.2% in Jun from the previous month. Prices climbed 3% on an annual basis, slightly below the 3.1% increase forecast. Although inflation has cooled from a peak of 9.1%, it still remains above the Federal Reserve's 2% target rate. Other parts of the report pointed to a slower retreat for inflation. Core prices, which exclude the more volatile measurements of food & energy, climbed 0.2%, or 4.8% annually. Both of those figures are lower than expected. However, core prices remain well above the Fed's target. The report is the last before the Fed's policy-setting next meeting on Jul 25-26 & will have major implications for the central bank, which raised interest rates 10 straight times over the course of 15 months in a bid to crush out-of-control inflation. Despite the slowdown in inflation, policymakers are widely expected to approve another ¼-percentage point hike at the conclusion of their meeting. An overwhelming percentage of traders, more than 92%, anticipate the Fed will lift interest rates again at the end of the month. Other price gains proved persistent & stubbornly high in Jun. Shelter costs, which account for about 40% of the core inflation increase, rose 0.4% for the month & are up 7.8% over the past year. Energy prices also jumped 0.6% last month, including a 1% uptick in gas costs. However, gas prices are down 26.5% compared to the same time last year, when an average gallon was running around $4.65. Food prices, a visceral reminder of inflation for many Americans, also inched higher in Jun. Food costs rose 0.1% in Jun & are up 5.7% compared to the same time last year. "Prices for everything from eggs to used cars dropped in June, causing a big deflation in inflation," said Robert Frick, a corp economist for the Navy Federal Credit Union. "By one measure, inflation is just one-third of what it was a year ago. However, this is not yet a turning point. Core inflation will prove tougher to beat."
Inflation slows more than expected in June, but still above Fed's target
Treasury yields dropped after the inflation report in Jun showed an easing in prices. The 2-year Treasury slid by 15 basis points to 4.74%. The 10-year Treasury yield fell 9 basis points to 3.891%. Yields & prices move in opposite directions. One basis point equals 0.01%. Fed officials have in recent weeks suggested that the battle against inflation is not yet over & interest rates will therefore likely need to be hiked further to ease pressures from rising prices. Markets
are widely pricing in a rate hike from the central bank at its next
meeting later this month & policymakers have indicated that this may
not be the last rate increase of the year, depending on data. Investors
will also be following remarks from Fed speakers for
fresh hints tomorrow about the policy outlook.
2-year Treasury yield tumbles after June CPI is less than expected
United Auto Workers Pres Shawn Fain promised union members he'd do things differently during contract talks with the automakers this year. Thus far, he has delivered. Fain has propelled the UAW into the national spotlight with politically savvy strategies, resonant social media messaging & confidence that the embattled union can ride a national wave of support for organized labor to win a “war” against “corporate greed” & multibillion-dollar corps General Motors (GM), Ford (F) & Stellantis (STLA). “This is our defining moment, as a union as working people. And we’re taking a different approach every step of the way,” Fain said yesterday. The consensus among past bargainers & several people involved with prior negotiations is that this year's bargaining, which formally kicks off today, will be “different.” It will also be “confrontational,” “costly,” “critical,” “unprecedented” & a “s---show,” some said. The negotiations feature new top bargainers on nearly all sides attempting to prove themselves, a belief among union membership that concessions are not an option, & significant concerns about the industry’s transition to electric vehicles eliminating jobs & deteriorating wages.
Auto industry braces for contentious contract talks as UAW formally kicks off bargaining
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