July 12 New York

The DJIA soared by 123.07 points to 21532.14 while the S&P 500 Index rose by 17.72 points to 2443.25.  The Nasdaq Composite Index gained by 67.866 points to 6261.171 while the Nasdaq 100 Index rose by 69.151 points to 5778.950.  In response to Fed Chair Yellen’s dovish tone in her testimony, the yield on 10-year Treasuries fell by 4.3 basis points to 2.318 percent.  At the same time, the U.S. dollar retreated against major peers.  The yen strengthened by 0.77 to 113.17 per dollar.  WTI crude futures rose by 45 cents to settle at $45.49 a barrel.  Crude inventories fell 7.56 million barrels last week, the EIA said.  U.S. production, though, continued to rise, gaining 0.6 percent to 9, 397,000 barrels a day.  The OPEC is said to have set a meeting for July 17.  A billion-barrel crude discovery in Mexico could be a great benefit to the country.  U.S. stocks rose toward records, Treasuries rallied and the dollar retreated after Janet Yellen signaled the Federal Reserve won’t rush to tighten monetary policy as inflation remains persistently below target.  The DJIA closed at a fresh all-time high, technology shares added more than 1 percent and emerging-market equities surged to levels last seen in 2015 as Yellen expressed confidence in the American economy while suggesting inflation rates won’t force the Fed’s hand.  The statement from Yellen diverted attention from the release of emails by Donald Trump Jr. about his controversial meeting with a Russian lawyer, though concern remains that the latest saga in Washington may be an unwelcome distraction for the Fed seeking to dismantle a decade of monetary stimulus.  Yellen’s dovish tone came as the Bank of Canada raised interest rates for the first time in seven years even as inflation in the country remains stubbonly sluggish.  Central banks around the world except Japan have been hinting that the accommodative policies in place for years may no longer be needed amid signs that the global economy is gaining momentum gradually.  A billion-barrel crude discovery in Mexico could be just the lure the country needs to boost investment from oil majors as it lacks the money to reverse years of sagging output.  On Wednesday, Premier Oil Plc, Sierra Oil&gas and Talos Energy LLC announced a reservoir with an estimated 1.4 billion to 2 billion barrels.  With new auctions set for the end of the year, the find promises to rev up interest in Mexico’s energy riches moving forward, said Pablo Medina, an analyst at the consulting firm Wood Mackenzie Ltd.

Kazuhide Matsuishi

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