Markets sell-off on recession fears

Dow sank 401, decliners over advancers better than 3-2 & NAZ plummeted 656.  The MLP index rose 3+ to 316 & the REIT index added 2 to the 414s as yields dropped.  Junk bond funds drifted lower & Treasuries saw heavy buying which sharply lowered yields.  Oil slid lower in the 66s & gold was off 1 to 2913.

Dow Jones Industrials

Energy Secretary Chris Wright slammed the Biden administration's climate policies today, vowing to support natural gas production.  “The Trump administration will end the Biden administration’s irrational, quasi-religious policies on climate change that imposed endless sacrifices on our citizens,” Wright said at an energy conference.  The energy secretary dismissed the previous administration's focus on climate as “myopic.”  Natural gas is responsible for 43% of US electricity production.  There “is simply no physical way that wind, solar & batteries could replace the myriad uses of natural gas,” Wright said.  The energy secretary rejected accusations that he is climate change denier.  Wright has previously said there is no climate crisis & carbon dioxide emissions are not a pollutant.  “The Trump administration will treat climate change for what it is — a global physical phenomenon that is a side effect of building the modern world,” Wright added.  The energy secretary called Biden’s policies “economically destructive to our businesses and politically polarizing.”  “The cure was far more destructive than the disease,” he said.

Energy Secretary Wright vows to reverse Biden climate policies, says renewables can’t replace gas

Inflation could prove sticky while prices might pick up again, Federal Reserve Governor Adriana Kugler warned, signaling that the central bank should keep interest rates steady for the time.  “I’m actually quite concerned about some of the persistence in inflation that we have been seeing,” she said during a fireside chat.  She pointed to a recent acceleration of inflation expectations, which she said she watches closely for their effect on how businesses set prices & how workers negotiate wages.  This in turn means they could feed back into inflation.  Several recent data points have indicated concerns from consumers about prices increasing, with the latest Consumer Confidence Index from the Conference Board showing 12-month inflation expectations jumped to 6% in Feb, up from 5.2% the prior month.  “I have been one of those who has supported strongly any policy that really keeps inflation expectations well anchored. And I think that’s critical, and it has served us well,” Kugler continued.  Looking ahead, the Kugler indicated that prices could also rise again.  “I think you know there is reason to believe, potentially, that there could be price increases and more persistent inflation,” she noted, adding that higher prices could come from “some of the policies that maybe are being considered and some that have already been put into place.”  Such policies could also impact economic activity, Kugler said.  “We need to probably take account of some of this persistence that I mentioned, because of different categories of prices, because of inflation expectations, and potentially because some of the new policies that are ahead of us,” Kugler continued.  Touching on the frequently changing developments surrounding the administration's decision to impose tariffs on goods imported from key trading partners, including negotiations and potential retaliatory moves, Kugler said there was still “considerable uncertainty.”

Kugler says Fed should hold interest rates amid inflation risks

Treasury yields were lower as investors await a busy week of key economic data & take in the state of the US economy after comments from Pres Trump over the weekend.  The benchmark 10-year Treasury yield fell 10 basis points to 4.215% & the  2-year Treasury yield dropped by nearly 9 basis points to 3.916%.  One basis point is equal to 0.01% & yields & prices move in opposite directions.  Investor concerns picked up over the weekend, as Trump commented that his tariffs may affect US growth & didn't rule out the possibility of a recession by saying the economy was going thru “a period of transition.”  Treasury Secretary Scott Bessent made similar remarks on Fri, saying the economy may be slowing.  “Could we be seeing that this economy that we inherited starting to roll a bit? Sure.  And look, there’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent said.  “The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period,” he added. 

10-year Treasury slides on rising recession concerns

Stocks fell solidly as investors processed growing concerns about the health of the US economy & readied for a busy week of economic data, headlined by a report on inflation amid concerns over its resurgence under Pres Trump's unpredictable trade policy.  Mar's market struggles continue to be fueled by worries over the health of the US economy.  Those concerns have become wrapped up in Trump's ongoing trade salvo, as tariff negotiations between the US, Mexico & Canada dominate the headlines.  Yesterday Trump addressed concerns about a potential recession, describing the economy as undergoing a period of transition.