Dow declined 164, advancers over decliners 3-2 & NAZ was off 39. The MLP index gained 4 to 179 & the REIT index slid back to the 427s. Junk bond funds fluctuated & Treasuries inched higher in price. Oil climbed higher in the 63s & gold added 1 to 1789 (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)
The Federal Reeserve said that it would maintain ultra-low interest rates &
reaffirmed its commitment to other easing policies even as the economjic recovery from the coronavirus pandemic rapidly strengthens. The
central bank, as widely expected, held the benchmark federal funds
rate at a range between 0%-0.25%, where it has been since Mar
2020, when COVID-19 forced an unprecedented shutdown of the nation's
economy. Since Jun, the Fed has also been purchasing $120B in
bonds each month, a policy known as "quantitative easing" that's
designed to keep credit cheap. Policymakers unanimously pledged to
maintain the current policy stance until "labor market conditions have
reached levels consistent with the Committee's assessments of maximum
employment and inflation has risen to 2 percent and is on track to
moderately exceed 2 percent for some time." Fed Chair Jerome
Powell has previously said these conditions are unlikely to occur this
year & economic projections from the last meeting show that
most officials expect rates to remain near zero thru 2023. About 7 of the 18 Fed officials at the meeting said they expect to start
lifting rates in 2022 or 2023 -- an increase from Dec, when just
five forecast a rate hike. But officials acknowledged that the
economic outlook has brightened drastically in recent months as
vaccination rates have increased, business restrictions have eased &
more Americans venture out to shop, eat at restaurants & travel. On
top of that, Pres Biden in Mar signed into law a sweeping relief
plan that will pump another $1.9T into the nation's economy. "Amid
progress on vaccinations and strong policy support, indicators of
economic activity and employment have strengthened," the FOMC said. "The sectors most
adversely affected by the pandemic remain weak but have shown
improvement." Nevertheless, the Fed reiterated that the path of
the economy ultimately depends "significantly on the course of the
virus, including progress on vaccinations." There are still
roughly 8.4M fewer jobs than there were before the pandemic
struck & the jobless rate remains at 6%, well above the ½-century
low it sat at last Feb. Although inflation has risen recently,
policymakers called the uptick "transitory" & noted that it's running
consistently below the Fed's 2% target. "The ongoing public health
crisis continues to weigh on the economy and risks to the economic
outlook remain," the statement added. It marked a slight improvement from
the Mar statement, when policymakers said the health crisis
"poses considerable risks to the economic outlook."
India reported a record daily death toll as total Covid-19 fatalities crossed the 200K mark. Gov
data showed at least 3293 people died over a 24-hour period. Overall
cases also rose by a record 361K reported infections, marking India's 7th consecutive day of over 300K new infections. The
country's total number of Covid cases is just below 18M while
the death toll stands at 201K. Recent media reports, however, suggest
the daily fatality number may be under-reported. So
far in Apr alone, the South Asian nation has reported more than 5.8M new cases, sending the country's health-care system to the
brink. The intl community responded
with promises to send India desperately needed aid. The US
said it would send raw materials required for the South Asian country to
manufacture AstraZeneca's (AZN) vaccine. India
has so far administered more than 145M vaccine doses. But, as of yesterday, only around 23.9M people have received their 2nd doses.
India reports record new fatalities, official Covid death toll tops 200,000
Gold futures registered a back-to-back loss, pressured
by a rise in Treasury yields, then made only modest moves after the
Federal Reserve left benchmark interest rates unchanged & said it
would continue with its asset purchases. 10-year yields continued to head higher after the Fed news, with the 10-year Treasury note moving back above 1.64%. Higher yields can be a drag on gold & other commodities
because it raises the opportunity cost of holding assets that don't
offer a yield. A stronger $ can be a negative because it makes
commodities priced in the currency more expensive to users of other
currencies. Gold for June traded at $1774 an ounce in electronic trading shortly after
the Fed statement. The contract fell $4 to settle at
$1773 an ounce ahead of the news. That was the lowest
most-active contract finish since Apr 19. Prices
were flattish yetersday.
Gold settles lower as Treasury yields rise, then modestly react to the Fed statement
The US trade deficit in goods rose in Mar for the 3rd month in
a row & hit another record high, but the upsurge mostly stems from
the American economy recovering faster than other countries. The advanced trade gap in goods climbed 4% to $90.6B in Mar, the Census Bureau said. An advanced look at wholesale inventories, meanwhile, showed a
1.4% increase in Mar & an early look at retail inventories
revealed a 1.4% decline. Imports of goods jumped 6.8% to a record $232B in Mar. Americans are buying more goods generally during the pandemic &
foreign producers of food, drinks, consumer electronic, autos &
industrial supplies have all been big beneficiaries. Exports increased 8.7% to $142B. Exports have recovered more slowly than imports because the economies
of other countries haven't recovered as rapidly as the US & the result
has been softer demand for US goods. The gov will
release overall trade numbers for Mar next week, but the size of the
trade deficit is generally tied to changes in exports & imports of
goods. Trade patterns involving services rarely change much from month
to month. A higher deficit subtracts from GDP, the official scorecard for the US economy. Trade is one of the few areas that has been a relative weak spot in
terms of GDP, but strong consumer & business spending have easily
offset the drag. The gov tomorrow is expected to report that
GDP surged 6.5% in Q1.
Oil futures climbed to score their highest finish in 6
weeks, a day after OPEC & its allies stuck with plans to continue gradually easing
production curbs, signaling confidence in the demand outlook despite a
surge in COVID-19 cases in India. Prices extended their gains
after a US gov report revealed a modest weekly increase in
domestic crude & gasoline supplies, along with data showing a
significant rise in implied demand for gasoline from a year ago. West Texas Intermediate (WTI) crude for Jun rose 92¢ (1.5%) to settle at $63.86 a barrel. Front-month Jun Brent crude,
the global benchmark, rose 85¢ (1.3%) to $67.27 a barrel. Jul Brent crude,
the most actively traded contract, added 91¢ (1.4%) at $66.78 a barrel. Based on the front-month contracts, both WTI & Brent registered the highest settlements since Mar 17. Prices for both benchmarks gained more ground after a weekly report
on petroleum supplies from the Energy Information Administration (EIA). The report revealed that over the past 4 weeks, motor gasoline product supplied, a proxy for demand, has
climbed by 67.5% from the same period a year ago, to average 8.9M barrels a day. US crude inventories edged up
by 100K barrels last week, the EIA said. The forecast a decline of
200K barrels for crude stocks, while the American Petroleum Institute reported a 4.3M-barrel rise. The EIA data also showed crude stocks at the Cushing, Okla, storage hub climbed by 700K barrels for the week. Total oil production, however, edged down by 100K barrels to 10.9M barrels per day. Yesterday, prices for oil also rose. OPEC & its allies (OPEC+) decided, during a surprise meeting, to stick with a plan to gradually relax output curbs beginning next month.
Oil prices end at 6-week high on OPEC+ decision, signs of stronger demand
The Fed said what was expected although the mention of rising inflation bothered some investors. An attempted rally late in the session failed in the last hour when sellers returned. Biden will speak this evening & contents of his talk have been leaked. He wants to spend more which will aggravate the rising deficit even though the economy is doing well. Rising inflation is out there. The increasing case load in India is becoming scary because it endangers the global economy.
Dow Jones Industrials
