Markets stumble while gold is in heavy demand

Dow dropped 247, decliners over advancers 2-1 & NAZ lost 11.  The MLP index crawled up to 281 & the REIT index retreated 4+ to the 481s as interest rates rallied.  Junk bond funds fluctuated & Treasuries were heavily sold taking yields sharply higher (more below).  Oil was fractionally higher to 84 & gold advanced 20 to 2058 for another record (more below).

AMJ (Alerian MLP Index tracking fund)

Maryland Gov Wes Moore said his state won't be the only one to feel the economic impact of the collapse of the Francis Scott Key Bridge in the Port of Baltimore, warning ripples will be felt in numerous industries across the country.  Moore discussed the important role one of the nation's busiest ports plays in the national economy as officials continue to remove the steel debris from the fallen bridge & the Eiffel Tower-sized vessel blocks shipping lanes.  "It's not just a massive impact on Maryland," he said.  "This is a massive impact on the national economy."  Moore said the Port of Baltimore has a far-reaching impact on states across the country because it handles more cars, heavy trucks & agricultural equipment than any other port in the US.  The American Trucking Association said an estimated 4900 trucks traveled the bridge every day, carrying about $28B in goods every year.  The port is the busiest in the US for car shipments, handling more than 750K vehicles in 2023, according to data from the Maryland Port Administration.  It is also the largest US port by volume for handling farm & construction machinery & agricultural products.  While Moore said it was imperative to clear debris & rebuild the bridge, the governor did not provide a timeline when asked, emphasizing that it is a "remarkably complex operation."  "We know this is going to be a long road to recovery, but we know that we have to move with safety, and we have to move with speed in order to get our commercial engine going again," the governor added.  "I want that investigation to be speedy, and for anyone who needs to be held accountable to be held accountable," Moore said.  "And, at the same time, we have got to get this channel opened. We have got to get commerce flowing again. And we have got to rebuild the Francis Scott Key Bridge."

Maryland governor warns bridge collapse will have 'massive impact' on US economy

Treasury yields rose as investors kicked off the 2nd qtr & weighed the latest US inflation data.  The 10-year Treasury note was trading more than 11 basis points higher around 4.313%, while the yield on the 2-year note was 7 basis points higher at 4.695%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Yields rose after Federal Reserve Chair Jerome Powell said that policymakers don't need to rush an interest rate cut, as economic growth remains strong and inflation is above target.  “That means we don’t need to be in a hurry to cut,” the central bank chief continued.  “The economy is strong right now, and the labor market is strong right now. And inflation has been coming down. We can and we will be careful about this decision because we can be.”  Markets are also reacting to the Bureau of Economic Analysis' personal consumption expenditures reading for Feb, the Fed's preferred inflation gauge, released on Fri.  Excluding food & energy, the PCE rose by 2.8% on a 12-month basis & was 0.3% higher from a month earlier, meeting expectations.

Treasury yields jump to start second quarter

Gold prices scaled to another record high, propelled by US interest rate cut expectations & the metal's appeal as a safe haven asset.  Spot gold added 0.2% to trade at $2235 per ounce.  US gold futures rose 0.8% to trade at $2257  per ounce.  “I think it’s a really exciting moment in gold,” said Joseph Cavatoni, market strategist at the World Gold Council (WGC), he said.  “What’s really driving it is, I think, many market speculators really getting that confidence and comfort [in] the Fed cuts,” he said.  Market watchers are expecting the Federal Reserve to cut interest rates in Jun.  The key Fed inflation gauge for Feb climbed 2.8% year on year, according to data last Fri — likely to keep the central bank on hold before it can start considering rate cuts.  The Fed stood pat on interest rates at the conclusion of its recent Mar meeting, but stuck with its forecast for 3 rate reductions this year.  Gold prices tend to share an inverse relationship with interest rates.  As interest rates fall, gold becomes more appealing compared with fixed income assets such as bonds, which would yield weaker returns in a low interest rate environment.  China is the leading driver for both consumer demand & central bank gold purchases, according to data from the WGC.

Gold prices hit another record high after fresh U.S. data spurs Fed cut expectations

Repairing the bridge in Baltimore will be an enormous task & could be a drag in the economy for the rest of the year.  Gold bugs keep buying gold with all the unsettled conditions in the economy.

Dow Jones Industrials