Dow went up 22, advancers over decliners 3-2 & NAZ gained 27. The MLP index rebounded 1 to the 246s & the REIT index gained 3+ to the 377s. Junk bond funds were mixed & Treasuries had some buying which reduced yields (more below). Oil was fractionally higher to the 69s after recent selling & gold added 3 to 1996.
AMJ (Alerian MLP Index tracking fund)
Inflation at the wholesale level moderated more than expected in Nov, the latest sign that high consumer prices are beginning to loosen their stranglehold on the US economy. The Labor Dept said that its producer price index, which measures inflation at the wholesale level before it reaches consumers, was unchanged in Nov from the previous month. On an annual basis, prices remain up 0.9%, a sharp drop from the 1.3% recorded in Sep. Those figures are both lower than the 0.1% monthly gain & 1% annual figure predicted. In another sign that suggests high inflation is beginning to dissipate, core prices, which exclude the more volatile measurements of food & energy, were also unchanged for the month, lower than the 0.2% estimate. The figure was up 2.2% on a 12-month basis, down from 2.4% the previous month. The data comes a day after the Labor Dept reported that the consumer price index, which measures the prices paid directly by consumers, rose 0.1% in Nov, slightly more than expected. The back-to-back inflation reports will have major implications for the Federal Reserve, which has raised interest rates at the fastest pace in decades as it tries to cool the economy. The central bank has approved 11 rate hikes since Mar 2022, lifting the federal funds rate to the highest level since 2001. Policymakers are widely expected to skip an interest-rate hike for the 3rd straight time at the conclusion of their final meeting this year after lunch. Many economists believe the central bank is done raising interest rates given the notable decline in inflation in recent months, & will soon pivot to cutting rates.
Wholesale inflation eases more than expected in November
Treasury yields fell slightly as investors awaited the Federal Reserve's latest interest rate decision & guidance on the outlook for monetary policy & the US economy. The yield on the 10-year Treasury dipped 4 basis points to 4.168% & the 2-year Treasury yield was last down by 4 basis points to 4.69%. Yields & prices have an inverted relationship & 1 basis point equals 0.01%. The Fed is widely expected to keep interest rates unchanged at the conclusion of its policy meeting today, the 3rd time in a row that rate would be held steady. Many investors are also hoping that the Fed will provide hints about the path for interest rates, including when it may cut rates. Policymakers have so far given few hints about this, though Fed Chair Jerome Powell earlier this month suggested it was too soon to speculate about rate cuts. Bond yields traded lower after wholesale prices provided another piece of positive inflation news. The producer price index was unchanged for the month, against the estimate for a 0.1% increase. Excluding food & energy, the index also was flat versus the forecast for a 0.2% increase. Excluding food, energy & trade services, the PPI rose 0.1%. On a year over year basis, the headline index was up just 0.9%; excluding food, energy & trade, it increased 2.5%. Data released yesterday showed the consumer price index (CPI) increased by 0.1% on a monthly & 3.1% on an annual basis in Nov. Economists were expecting the CPI to be flat month over month, while the annual increase was in line with expectations. The core CPI, which excludes food & energy prices, came in 0.3% higher than the previous month & was up by 4% from a year earlier.
Treasury yields dip as investors look to Fed rate decision, policy guidance
The US economy may not technically be in a recession, but most Americans believe it is. That's according to a recent survey conducted by Bankrate, which found 59% of US adults feel like the economy is in a recession, defined by 2 consecutive qtrs of negative growth. Regardless of income, households said they are feeling the pressure at about the same amount. 60% of respondents in the lowest-income households, making under $50K a year, said the economy feels like it is in a recession. Of those in higher-income households making more than $100K annually, 61% agreed. Gen Xers, ages 43-58, were the age group most likely to say the US is in a recession at 65%, followed by millenials (ages 27-42) at 60%, baby boomers (ages 59-77) at 58% & Gen Z (ages 18-26) at 55%. Households with children younger than 18 were the most likely to say the economy is in a recession at 66%. 63% of parents with children aged 18 or older agreed, along with 54% of adults with no kids. An earlier Bankrate survey gives weight to those feelings, with 50% of Americans saying their overall financial situation has declined since the 2020 presidential election. The latest findings indicated 66%, say the current economic environment, including factors such as elevated inflation, rising interest rates & changes in income or employment, has negatively impacted their finances this year & 85% of those who agree the economy is in a recession share that same sentiment. More than 3 in 5 adults (64%) said they have changed their financial habits this year because of the economic environment & that jumped to 81% among those who believe the economy is in a recession. "Americans seem to be evaluating the economy with different metrics than experts," said Bankrate analyst Sarah Foster. "While economists are watching carefully for broad-based declines in growth, households focus on whether they can afford their needs and the occasional wants while still having enough money left over to put toward key financial goals like saving for emergencies & retirement. Americans judge the economy’s strength by their own individual experiences living within it, and nationwide numbers often don’t tell the same story as their finances.C
Majority of Americans disagree with experts on state of economy, survey finds
Today's inflation news was another indication that very high inflation has cooled. Lower inflation is helped by a fall in oil prices which is not part of long term trend. Now traders are waiting to hear Powell will say shortly about the economy & inflation.Dow Jones Industrials
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