FinSer 

 Financial Focus

August 22,2019

 

GOOD MORNING!    Both stocks and bonds waffled between gains and losses Thursday as they got caught in crosswinds of data and multiple think and re-thinks about what Fed Chairman Powell is going to say today after three Fed regional presidents opined that rates didn’t need being reduced.  If the biggest problem is trade uncertainty or Germany and China dragging down global growth, cutting US rates will not resolve either of those.  Since December, the Fed has declared that they also listen to the markets, but the markets aren’t in control of monetary policy.  Or are they?  Some of the wiggle-waggle in the markets yesterday came from mixed economic news.  The first was that the Eurozone’s manufacturing and service flash PMIs showed improvement.  To keep the markets off balance jobless claims data was better than expected, but the flash US PMIs weakened with the manufacturing PMI from the Markit Group falling into contraction territory for the first time in nearly a decade.  But the markets weren’t done doing the serpentine are acting like my cheap sofa that has the impression of the last person sitting on it.  The July Leading Economic Indicator figures were better than anticipated, signaling that economic momentum is persisting at a subdued pace in spite of the headwinds and elevated uncertainties.  In the end, stocks closed mixed and Treasury yields’ final zig-zag of the day had them slightly higher.

      The Treasury market continues to trade soft this morning, re-adjusting pricing given the 3 regional Fed presidents giving interviews yesterday weren’t as dovish as suggested by the Treasury pricing and yields.  However, the wildcard will flipped over at 10:00am EDT, 9:00am CDT when Fed Chairman Powell kicks off the Jackson Hole, Wyoming symposium with a speech on the challenges for monetary policy.  His speech will likely be a market mover, given the history of this KC Fed confab.  Greenspan spoke of irrational exuberance and Bernanke used a couple of meetings on QE and more QE.  Expect volatility until the focus shifts to this weekend’s G-7 meeting.  The public is beginning to understand it is mostly a photo op for large egos, but with all the conflicts, it may be more interesting for a change.  New home sales for July will be released about the same time Powell enters the spotlight and will probably be lost in his shadow.

 

GENERAL
TODAY
PREVIOUS
FED FUNDS
2.00% to 2.25% 2.00% to 2.25%
1 MONTH LIBOR
2.16663%
2.17000%
S & P 500
2922.95 2929.43
GOLD
1505.20 1506.20
YEN
106.63 106.49
EURO
1.1057 1.1075
WEST TEXAS CRUDE
55.35 55.68
T-BILLS
YIELD
YIELD
3 MONTH
1.97 1.96
6 MONTH
1.90 1.89
1 YEAR
1.78 1.76
T-NOTES / BONDS
YIELD
YIELD
2 YEAR
1.62 1.57
3 YEAR
1.55
1.50
5 YEAR
1.50 1.47
10 YEAR
1.63 1.59
30 YEAR
2.12 2.07

Data Source: Bloomberg Financial Markets