Dow went up 99, advancers over decliners better than 3-2 & NAZ gained 96. The MLP index drawled higher to the 253s & the REIT index added 1 to the 354s. Junk bond funds inched higher & Treasuries had limited selling, raising yields slightly (more below). Oil rose 1+ to the high 77s & gold was off 10 to 1974.
AMJ (Alerian MLP Index tracking fund)
Treasury Secretary Janet Yellen pointed to the consistently higher prices that Americans pay for food & rent today, compared with pre-pandemic levels, as a major factor driving voters' negative outlook on the economy. “Although prices in general are rising less quickly, Americans still see increases in some important prices, including food, from where we were prior to the pandemic. And this remains notable to people who go to the store and shop,” Yellen said. As overall inflation rates have come down over the past year, food prices have consistently outpaced baseline inflation, according to the Bureau of Labor Statistics. There are lots of reasons for this, ranging from the war in Ukraine's impact on grain prices to restaurants charging higher prices for menu items. Rent price inflation also remains stubbornly high. “Rents are rising less quickly now, but are certainly higher than they were before the pandemic,” Yellen added. “So I do think we’re making considerable progress in bringing inflation down. But Americans do notice higher prices from what they used to be accustomed to,” she continued. As Pres Biden runs for reelection, this disparity between what the Biden administration sees as “considerable progress” & what voters see in their monthly household expenses is shaping up to be one of the strongest headwinds Biden faces. Nearly 60% of registered voters disapprove of Biden's handling of the economy, while only 38% approve, according to the most recent NBC News poll. The numbers were in line with other polls that show large majorities of voters would rate the present US economy as poor or fair, despite historic levels of job growth.
Yellen says high food and rent prices are key factors in voters’ negative economic outlook
Treasury yields were slightly higher as investors considered the economic outlook & as they assessed the chances that the Federal Reserve’s interest-rate hiking cycle is over. The yield on the 10-year Treasury was over 2 basis points higher at 4.465%. It had briefly touched its lowest level since Sep with 4.379% on Fri & the 2-year Treasury yield was little changed at 4.9%. Yields & prices move in opposite directions & 1 basis point is equivalent to 0.01%. Investors assessed the outlook for the economy & Federal Reserve monetary policy as hopes that the central bank is done hiking rates grew in recent weeks. That came after both the producer & consumer price index came in lower than expected last week, suggesting that inflation is easing & the Fed's interest rate hikes are having the desired effect of cooling the economy. The Fed is due to meet once more this year in Dec & markets are widely expecting interest rates to remain unchanged then. Investors are considering when the Fed will begin cutting rates, a question Fed officials have not addressed in detail. The topic was not discussed at the central bank's latest meeting, Fed Chair Jerome Powell said at the time, but many investors are hoping that this may change based on recent economic data.
Treasury yields rise as investors weigh economic outlook
Yemen's Iran-backed Houthi militants have captured what they called an Israeli ship in the Red Sea & taken it to the Yemeni coast, calling all Israeli vessels a “legitimate target.” “The Yemeni armed forces reiterate their warning to all ships belonging to or dealing with the Israeli enemy that they will become a legitimate target for armed forces,” Houthi spokesperson Yahya Saree said. He urged the intl community to avoid working with Israeli ships or owned by Israeli individuals. “Yemeni armed forces confirm that they will continue to carry out military operations against the Israeli enemy until the aggression against Gaza stops,” the spokesperson added. Today, Japan's top gov spokesperson confirmed the capture of the Nippon Yusen-operated ship. Tokyo is now appealing with the Houthis for the release of the vessel & seeking the help of Saudi, Omani & Iranian authorities. Marinetraffic.com data indicates that the 21-year-old cargo vessel is sailing under the flag of Bahamas. “The hijacking of a cargo ship by the Houthis near Yemen in the southern Red Sea is a very grave incident of global consequence,” the Israeli military said. “The ship departed Turkey on its way to India, staffed by civilians of various nationalities, not including Israelis. It is not an Israeli ship.” Israeli Prime Minister Benjamin Netanyahu's office qualified the vessel as owned by a British company & operated by a Japanese business, stating no Israeli people were present on the vessel. “This is another act of Iranian terrorism which expresses a leap forward in Iran’s aggression against the citizens of the free world, and creates international implications regarding the security of global shipping lanes,” Netanyahu said.
Yemen’s Houthi capture ship on suspicion of Israeli connection
This week is generally a quiet week for the stock market with no trading on Thurs & a ½ day on Fri. But that assumes the news is not exciting. The hijacking of the cargo ship by the Houthis signals the Mideast must be watched closing. A lot of global trade goes thru those waters, starting with oil.
Dow Jones Industrials
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