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December 18, 2018

Markets Await Fed's Rate Decision

 

To Hike or Not to Hike

Tomorrow afternoon global financial markets will devote their attention to the announcement of the Fed’s monetary policy decision and subsequent release of the Committee’s dot plot.  While Fed Funds futures continue to price a higher likelihood of a rate hike than not, today several market pundits publicly communicated their support for the Fed to hold rates steady, a sentiment that was supported yet again by President Trump:
 
I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they...

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December 17, 2018

Volatile Market Ahead of FOMC Rate Decision

 

Rates Continue to Fall Ahead of FOMC Meeting

Well-known investor and “bond king” Jeffrey Gundlach weighed in on the Federal Reserve’s upcoming rate decision, saying he doesn’t think they should hike rates- joining a growing chorus of voices clamoring for the Fed to avoid a policy mistake by raising rates too quickly. In particular, Gundlach pointed to the continued disparity between Fed’s projections and market rates as a sign the Federal Reserve is out of touch with the market… 10 year OIS rates are a full 100 basis lower than the Federal Reserve’s dot...

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December 14, 2018

US Stocks Enter Correction Territory

 

All Three Major U.S. Indices Enter Correction Territory

Underwhelming economic data from Europe and China lead to a retreat in US equities ahead of the Federal Reserve’s monetary policy decision next week, where the likelihood of a quarter-point hike is currently 72%, as per Fed Funds futures. The equity declines were led by technology stocks- a sector uniquely exposed to China. The S&P 500 technology sector ultimately closed 2.06% lower on the day. The S&P 500, Nasdaq Composite and Dow Jones Industrial Average are now all 10% below their most...

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December 13, 2018

ECB Ends Bond Purchases

 

Housing Price Appreciation Decelerates

Home prices continue to increase, but at a much slower rate as macroeconomic headwinds grow. The price appreciation slowdown that started in high-priced metropolitan areas like Seattle and Denver has now bled through to less expensive markets nationwide. Rising interest costs and reduced real estate speculation are the most likely culprits for the decline, which still pales in comparison to the drop in prices that preceded the global financial crisis.  In other economic news, initial jobless claims were reported at...

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December 12, 2018

Lower Inflation, Trade Progress Pushes US Equities Higher

 

Inflation Slows After Energy Prices Fall

The Consumer Price Index print came in as expected, with overall prices showing no change month-over-month, while core CPI rose 0.2% in November. Compared to a year earlier, both the headline and core CPI indices climbed a modest 2.2%. That tepid inflation number gives the Federal Reserve flexibility to slow down the pace of rates hikes into 2019, though markets continue to forecast a 72.3% likelihood of a 25 basis point rate hike at next week’s meeting. Treasury yields rose despite the tepid inflation print, the...

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December 11, 2018

Risk of Government Shutdown Weighs on Markets

 

Domestic Risks Rise

China agreed to cut tariffs on US automobiles back down to 15%, significantly lower than the current tariff level of 40%. That news accompanied reports of progress in trade talks between the two economic super powers. Investors immediately celebrated the perceived moderating of trade tensions, with the S&P 500 trading as much as 1.4% higher to start the session. That market joy soon came to an abrupt end though, as video emerged of President Trump, Senator Chuck Schumer and Representative Nancy Pelosi arguing over the upcoming...

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December 10, 2018

Market Volatility Resumes

 

May on Borrowed Time

UK Prime Minister Theresa May addressed an unruly House of Commons today, announcing that she will delay a planned vote on the current Brexit deal due to lack of current support, pushing the British pound down 1.3%. May acknowledged she was facing defeat by a “significant margin” and will instead hope to negotiate a better deal. The new deal will need to appease the conservative eurosceptics who believe the current deal doesn’t do enough to ensure free trade can continue along the UK-Ireland border, while still being palatable to the EU...

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December 7, 2018

Week Ends With Yet Another Volatile Session

 

Continued Volatility for Equities…

Markets continued to whipsaw today as investors speculated on the uncertain potential outcomes to US-China trade relations/policy. The S&P 500 and Dow Jones Industrial Average both started out the day marginally positive before tumbling and closing down 2.24% and 2.33% respectively. While yesterday’s arrest of Meng Wanzhou, CFO of Chinese company Huawei, certainly kickstarted the sell-off, markets continue to trade against the likelihood of a truce being reached. Peter Navarro, a trade advisor to the President said ...

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December 6, 2018

Renewed Trade Worries Send Market Into Tailspin

 

Arrest of Huawei CFO Sparks Sell Off on Trade Fears

The surprise arrest of Huawei Technologies CFO Meng Wanzhou sent markets into a tailspin as investors considered the implications of the arrest on the trade war truce reached between the US and China. The arrest could not have come at a worse time for markets after an extremely volatile Tuesday session in the US, and a correlated sell-off among world stocks yesterday. There was a silver lining however- both the Dow Jones Industrial Average and the S&P 500 staged a late rally and closed down only .32%...

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December 5, 2018

Markets Closed as US Honors George H.W. Bush

 

Markets Closed as US Remembers George H.W. Bush

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