Dow up 33 after a late day rally, advancers ahead of decliners 5-4 & NAZ slipped back 31. The MLP index added 1 to the 226s & the REIT index eased back 1+ to the 389s. Junk bond funds were little changed & Treasuries had a little buying. Oil fell 1+ to 80 & gold was off 4 to 1810 (more on both below).
AMJ (Alerian MLP Index tracking fund)
Learn to trade options with MarketClub!
US households see annual increase related to bill paying
Federal Reserve moves to raise interest rates at the fastest pace in decades in order to combat inflation. Economists widely expect the Fed to trigger a recession with higher interest rates, which could force consumers & ultimately businesses to pull back on spending. Fed policymakers have made it clear that they anticipate unemployment to climb as a result of their interest-rate hike campaign. Updated projections from the Fed's meeting showed unemployment rising to 4.4% by the end of next year, up from the current rate of 3.5%. That is significantly higher than in Jun when policymakers saw the jobless rate inching up to 3.7%. That could mean roughly 1M Americans lose their jobs between now & the end of 2023. Fed Chair Jerome Powell has conceded that higher rates could "give rise to increases in unemployment."
Job cuts surge as companies brace for economic downturn
The EU agreed to cap Russian seaborne oil prices at $60 a barrel, after several days of intense negotiations over an appropriate level. The announcement comes after the G-7 group of advanced economies agreed in Sep to impose a limit on Russian seaborne crude and therefore constrain revenues the Kremlin makes from the commodity. However, details on how the cap would work in practice have been debated & hashed out since that point. Russia, amid its onslaught in Ukraine, has warned that an oil price cap could wreak havoc on the energy markets & push commodity prices even higher. The price limit will be reviewed regularly to monitor its market ramifications, but it should be “at least 5% below the average market price,” an EU document with details of the cap said. Negotiations had been held up by Poland, with ministers in Warsaw scrutinizing but then agreeing to the 5% adjustment mechanism. A formal announcement is expected Sun. Energy analysts have warned that the G-7 will need support from other major buyers if the cap is to be effective. China & India, for instance, increased their purchases of Russian oil following the invasion of Ukraine to benefit from discounted rates offered by Moscow. Kadri Simson, European commissioner for energy, said in Sep that China & India should support the measure. “It is unfair to pay excess revenues to Russia,” Simson said at the time. But there seems to be little appetite from these nations to comply with the cap. India's petroleum minister, Shri Hardeep S Puri, said in Sep he has a “moral duty” to his country's consumers. “We will buy oil from Russia, we will buy from wherever,” he added.
European Union officials set Russian oil price cap at $60 a barrel
Gold futures declined, but held onto a more than 3% gain for the week. Gold prices dipped after a shockingly hot [U.S.] nonfarm payroll report brought back the $ to life. Financial markets had to increase their Federal Reserve rate hiking expectations after wages surged in Nov. Still, gold has had a nice rally since early Nov & a significant pullback doesn't seem warranted as the economy is slowing down inflation should steadily decline & justify a pause in Fed rate hikes after the first qtr. Gold for Feb fell $5 to settle at $1809 an ounce. Based on the most-active contracts, prices rose 3.2% for the week.
Gold futures fall, hold onto a gain for the week
Oil futures finished with a loss, but ended higher for the week. The rebound in crude-oil prices recently is due to optimism that even though China is battling rising COVID rates, authorities will be much more flexible in how they implement restrictions & lockdowns. There is also concern that OPEC+ might announce further cuts to production at their monthly meeting Sun. However, oil prices fell today following news that the EU agreed on a price cap of $60 for Russian seaborne oil, which some analysts said would have little impact. US benchmark WTI crude for Jan fell $1.24 (1.5%) to settle at $79.98 a barrel. For the week, prices based on the front-month contract still gained nearly 4.9%.
Oil futures settle lower ahead of the OPEC+ meeting and EU ban on Russian oil
Dow Jones Industrials
