Dow soared 379 (going above 32K), advancers over decliners 3-1 & NAZ gained 55 after yesterday's advance. The MLP index added 2+ to 170 & the REIT index rose fractionally to the 384s. Junk bond funds fluctuated & Treasuries were a tad higher. Oil was higher in the 64s & gold was about even 1716.
AMJ (Alerian MLP index tracking fund)
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The cost of US consumer goods & services accelerated in Feb as a surge of gov stimulus raised fresh concerns about runaway economic growth & a rise in inflation. The consumer price index rose 0.4% in Feb, according to new data released by the Labor Dept, or up 1.7% on an annual basis. That compares to a 0.3% increase in Jan & a 1.4% rise on an annual basis. It marked the biggest annual gain in a year, although inflation remained well-below pre-pandemic levels at 1.7%. Inflation fears, driven in part by a rise in Treasury bond yields, have rattled investors in recent weeks, with some worried that it could prompt the Federal Reserve to pump the brakes & tighten monetary policy sooner than expected. The Fed likes inflation to run around 2%, although it adopted a new strategy over the summer in which it will keep the benchmark federal funds rate near zero, even if inflation rises above the preferred rate. Chair Jerome Powell acknowledged last week that policymakers expect to see a "transitory increase in inflation," but said he expects the central bank to be patient. “We monitor a broad range of financial conditions and we think that we are a long way from our goals,” Powell added. “I would be concerned by disorderly conditions in markets or persistent tightening in financial conditions that threatens the achievement of our goals.”
Consumer prices rose in February as Biden's spending plan sparks inflation fears
Treasury yields were flat, after data showed inflation stayed tame in Feb, spurring a jump in stocks. The yield on the benchmark 10-year Treasury note rose about 2 basis points to 1.54% & the yield on the 30-year Treasury bond advanced 2 basis points to 2.26%. Yields move inversely to prices (1 basis point equals 0.01%). Feb's consumer price index for Feb came in in-line with expectations. The Labor Dept said its consumer price index increased 0.4% last month after rising 0.3% in Jan. In the 12 months thru Feb, the CPI gained 1.7%, the largest rise since last Feb 2020, after climbing 1.4% in Jan. Concerns about higher inflation have been driving bond yields higher recently. The $1.9T fiscal stimulus package is expected to add juice to the economy. That has raised inflation concerns & the market could be spooked by a CPI report that is any hotter than expected.
Treasury yields flat after tame inflation report, key bond auction ahead
The Energy Information Administration (EIA) reported
that US crude inventories rose by 13.8M barrels last week. That followed a hefty 21.6M-barrel climb the week
before as domestic refinery activity continues to recover from
mid-Feb winter storms in Texas. The forecast called for a climb of 2.7M barrels for crude
stocks. The American Petroleum Institute
reported a 12.8M-barrel climb. The EIA
data also showed crude stocks at the Cushing, Okla, storage hub climbed
by 500K barrels for the week. The EIA also reported that gasoline
supply was down 11.9M barrels, while distillate stockpiles were
5.5M barrels lower for the week. The survey
had forecast supply declines of 4.8M barrels for gasoline &
3.8M barrels for distillate inventories. Apr West Texas
Intermediate crude was up 22¢ at $64.23 a barrel.
EIA reports a nearly 14 million-barrel weekly climb in U.S. crude supplies
Optimism by investors is very high while they wait for the stimulus bill (filled with pork which will be spent over several years) to be signed. Meanwhile inflation prospects are getting more attention after interest rates have risen sharply in recent months. The Dow below looks good with an impressive 1300 advance in Mar. But the dark clouds of inflation are not far away.
Dow Jones Industrials
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