Dow gained 36, decliners over advancers 3-2 & NAZ was off 115. The MLP index rose 2+ to the 208s & the REIT index added 3+ to the 345s. Junk bond funds inched higher & Treasuries yields were flattish in the PM. Oil continued down 1+ to the 89s & gold went up 11 to 1686 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Consumer expectations for where inflation will be one year from now eased again in Sep, according to a key Federal Reserve Bank of New York survey, a potentially reassuring sign for the central bank as it tries to cool surging prices. The median expectation is that the inflation rate will be up 5.4% one year from now, the lowest level since Sep 2021, according to the New York Federal Reserve's Survey of Consumer Expectations. It marked the 3rd straight monthly decline in year-ahead inflation expectations. However, Americans see inflation remaining higher in coming years than they initially thought, according to the survey. 3 years from now, consumers see inflation edging higher to 2.9% – up from the 2.8% recorded in Aug. Consumers anticipate that prices will remain above the Fed's 2% goal over the next 5 years, projecting that the inflation rate will hover around 2.2% in 2027. "Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—decreased at the short-term horizon and was unchanged at the medium-term horizon," the survey said. The survey plays a critical role in determining how Fed policymakers respond to the inflation crisis. That is because actual inflation depends, at least in part, on what consumers think it will be. It is sort of a self-fulfilling prophecy – if everyone expects prices to rise by 3% in the year, that signals to businesses that they can increase prices by at least 3%. Workers, in turn, will want a 3% pay raise to offset the rising costs.
Americans' inflation expectations dropped again, survey shows
California's ongoing drought is expected to impact the prices of key crops, driving food inflation even higher for consumers. The US Drought Monitor
– a collaboration between the University of Nebraska-Lincoln, Dept of Agriculture (USDA) & the National Oceanic &
Atmosphere Administration – reported about 94% of California fell under
the severe, extreme or exceptional drought categories as of last week. In early Jul, nearly 97.5% of the Golden State had such drought conditions. According to the California Dept of Food & Agriculture, California grows over 1/3 of the nation's vegetables & ¾ of its fruits & nuts. The state's total production
of tomatoes, garlic & onions in 2021 was 224M hundredweight
(cwt), 4.192M cwt & 19M cwt respectively, per statistics from the USDA. Drought conditions & high temperatures in California "have made it
difficult for growers to meet market demand," the USDA said in a late Aug report
about the state's tomato production. In the report, the department
reduced this year's production projections for California processing
tomatoes, which are used to tomato-based products like ketchup & pasta
sauce, by 2% compared to last year.
Massive drought expected to drive food prices even higher
Leaders of some of the world's largest economies reiterated their commitment to Ukraine & condemned Russia's escalating aggression following a virtual meeting today, vowing to back Ukraine for “as long as it takes.” “We will continue to provide financial, humanitarian, military, diplomatic & legal support & will stand firmly with Ukraine for as long as it takes,” the G-7 group of nations said. “We are committed to supporting Ukraine in meeting its winter preparedness needs.” Ukrainian Pres Volodymyr Zelenskyy addressed the cohort virtually at the start of the meeting. The event came after Russia deployed around 80 missiles across Ukraine yesterday, killing at least 19 people & injuring many others, Ukrainian officials said. “We condemn these attacks in the strongest possible terms and recall that indiscriminate attacks on innocent civilian populations constitute a war crime,” the group added. “We will hold President [Vladimir] Putin and those responsible to account.” Pres Biden affirmed the group's stance following the meeting. He said that he & the G-7 leaders will keep their “unwavering commitment to hold Russia accountable for its war and support Ukraine for as long as it takes.” Russia was a member of the G-7 but was kicked out after it annexed the Ukrainian region of Crimea in 2014. The Kerch Strait Bridge connecting Russia to Crimea was damaged in a bombing Sat. The G-7 members are Canada, France, Germany, Italy, Japan, the UK, the US & the EU.
G-7 leaders promise to back Ukraine against Russia for ‘as long as it takes’
Gold shook off early
losses to finish higher, supported by a retreat in the $, despite anxieties about further interest rate rises by the
Federal Reserve in the face of high inflation. Gold for Dec rose $10 (0.6%) to end at $1686
an ounce after touching a low at $1667. Prices for the
most-active contract had touched their lowest intraday level in a week. Where gold concludes this week will most likely be influenced by the inflation data reported on Thurs. A red-hot CPI report will reinforce aggressive rate
hike bets, ultimately boosting the $ & Treasury yields — at
gold's peril. However, an inflation report that misses expectations could offer space
for gold bulls to fight back, opening a path back toward the
psychological important $1700 level.
Gold prices shake off early losses to end higher as U.S. inflation data looms
Oil futures declined, stretching their losses into a 2nd straight session. Prices weakened with recession fears running high. Worries about energy demand from China on the back of rising COVID-19 infections also contributed to price pressures. US benchmark West Texas Intermediate crude for Nov fell $1.78 (2%) to settle at $89.35 a barrel.
Oil futures log a second loss in a row
Dow Jones Industrials
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