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Markets jump on lower CPI inflation and Treasury yields fall sharply

Dow soared 284. advancers over decliners an impressive 5-1 & NAZ went up 178.  The MLP index was fractionally higher to the 234s & the REIT index gained 3+ to the 384s.  Junk bond funds drifted sideways & Treasuries were in heavy demand, taking yields lower.  Oil was up another 1+ to about 76 & gold added 23 to 1960 after recent weakness.

AMJ (Alerian MLP Index tracking fund)


 

 
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Inflation slows more than expected in June, but still above Fed's target

Treasury yields dropped after the inflation report in Jun showed an easing in prices.  The 2-year Treasury slid by 15 basis points to 4.74%.  The 10-year Treasury yield fell 9 basis points to 3.891%. Yields & prices move in opposite directions.  One basis point equals 0.01%.  Fed officials have in recent weeks suggested that the battle against inflation is not yet over & interest rates will therefore likely need to be hiked further to ease pressures from rising prices.  Markets are widely pricing in a rate hike from the central bank at its next meeting later this month & policymakers have indicated that this may not be the last rate increase of the year, depending on data.  Investors will also be following remarks from Fed speakers for fresh hints tomorrow about the policy outlook. 

2-year Treasury yield tumbles after June CPI is less than expected

General Motors (GM), Ford (F) & Stellantis (STLA).  “This is our defining moment, as a union as working people. And we’re taking a different approach every step of the way,” Fain said yesterday.  The consensus among past bargainers & several people involved with prior negotiations is that this year's bargaining, which formally kicks off today, will be “different.”  It will also be “confrontational,” “costly,” “critical,” “unprecedented” & a “s---show,” some said.  The negotiations feature new top bargainers on nearly all sides attempting to prove themselves, a belief among union membership that concessions are not an option, & significant concerns about the industry’s transition to electric vehicles eliminating jobs & deteriorating wages.

Auto industry braces for contentious contract talks as UAW formally kicks off bargaining

The Dow popped at the opening on the favorable inflation news & has remained at the elevated levels.  The producer price index will be reported tomorrow.  That will a glimpse into future price increases at retail.  Even if that data shows only modest inflation, the fight against high rates will not be finished.

Dow Jones Industrials

 








This post first appeared on VerySmartInvesting, please read the originial post: here

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Markets jump on lower CPI inflation and Treasury yields fall sharply

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