3 Things…

1. Trends/Bonds: S&P500 10% Below its 200 with a downtrend, NASDAQ  19% Below its 200 with a strong downtrend; 9% of the NASDAQ and 30% of the S&P500 are above their 200-Days; 8% and 17%, respectively, are above their 50-Days; Bulls24:Bears49; VIX Finally Falls Below 30; [1]

   U.S. Treasury prices slipped on Friday and yields jumped as investors sold out of government bonds and looked to move back into stock markets.

   The yield on the benchmark 10-year Treasury note surged 9 basis points to 2.909%. The yield on the 30-year Treasury bond climbed roughly 9 basis points to 3.056%. Yields move inversely to prices and 1 basis point is equal to 0.01%. [2]

2. Sectors: Best 1-month sectors: Energy (+1.14%), Staples (-2.84%), Utilities (-6.18%), Industrials (-6.63%), Materials (-7.20%); Crypto/Bitcoin rebounds above $30,000 Friday; [3]
3. Structured Note Values
   1. KRE Pricing Value 2/28/22: 73.49, Current 60.69-Delta -17.4%
   2. XLE/XOP Lowest, XLE Pricing Value 3/25/22: 78.75, Current: 80.45, Delta +2.2%; XOP Observation Value 3/25/22: 138.60, Current Value: 133.31-Delta -3.8%
   3. GDX/GDXJ Pricing Value: 4/29/22 34.99, Current: 31.14 Delta -11%; GDXJ Pricing Value 4/29/22: 42.95, Current: 37.39 Delta -13%[4]

Recent Highlights

• PPI increased 0.5% (05/12)
• Core PPI increased 0.6% (05/12)
• Initial Claims increased to 203,000 (05/12)
• Crude Inventories increased 8.5 million (05/11)

In the Markets

Wall Street had a mixed Thursday, thanks to concerns about continuing inflation. Wholesale inflation numbers came in lower than March but remained high. Robust labor market numbers could not lift investor mood, but stocks pared losses as the Senate confirmed Jerome Powell for the second term, giving him more time to tackle inflation as Fed chairman. Two of the three major indexes ended in the red, while one ended in the green.

Wholesale Inflation Numbers Keep Investors Worried

Labor Department reported that the Producer Price Index (PPI) for final demand increased 0.5% in April, following a 1.6% increase in March, and the year-over-year index increased 11% through to April 2022. Even though the numbers were lower than the prior period, which was March, they were high enough for investors to worry that the Fed would have to increase interest rates at an accelerated pace. The general opinion remained that inflation has already peaked but is yet to ease off.

Core PPI numbers, which exclude food, energy and trade services prices, increased by 0.6% in April after advancing 0.9% in March. The year-over-year increase in core PPI came in at 6.9%.

Powell Getting A Second Term Garners Positive Response

Fed Chairman Jerome Powell was recently vocal about fighting red-hot inflation. His policy moves such as raising interest rates and shrinking the central bank’s $9 trillion balance sheet have met with skepticism because of recessionary worries but are also looked upon as necessary to tackle inflation. The Senate, on Thursday, confirmed Powell for the second straight term, and the reaction of the markets seemed to be positive. The S&P 500, especially, was veering precariously close to bear market levels before the news somewhat bucked the trend.

Economic Data
The Labor Department said on Thursday that initial jobless claims increased to 203,000, rising 1,000 for the week ending May 7. The four-week moving average also increased to 192,750, an increase of 4,250 from the previous week’s revised average of 188,500.
Continuing claims came in at 1,343,000, decreasing 44,000 from the previous week’s revised level, and reflecting the lowest level since Jan 3, 1970. The previous week’s numbers were revised up by 3,000 from 1,384,000 to 1,387,000. The 4-week moving average came in at 1,385,000, a decrease of 32,750 from the previous week’s revised average. [4]

Sources: [1][3][4] Stockcharts.com; [2] CNBC.com; [5] Zacks Professional Services, “Today’s Key Market and Economic News” for Friday May 13, 2022;  

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