Crude jumped on optimism OPEC will agree to cut output. The dollar halted its longest winning streak versus the euro.
Commenting about oil, Iran signaled optimism that OPEC will agree to a supply cut deal and Iraq said it will offer new proposals to help bolster the group’s unity before next week’s meeting. Crude advanced 5.3% last week and yesterday another 4.5 % following Iraq’s statement that it is “highly probable” OPEC will reach a consensus.
What about the dollar? The greenback has advanced because the odds of “several” interest rate increases have risen exponentially. Speaking of interest rates, the 10-year is now yielding 2.33%, up from July’s nadir of 1.36%. On November 8, the 10-year stood around a 1.80% yield.
Ouch! I must remind all this benchmark commenced trading on January 1 at a 2.25% so essentially the 10-year is essentially unchanged for the year. However it is the trajectory. Will the 10-year pierce 3.0% in quick order?
To write the obvious, it depends upon the data.
2016 is going to be one for the record books. Brexit. Trump. Interest rates. Oil. S & P 500. Italexit?
What will happen today? Trading should start to wane towards days end ahead of the Thanksgiving holiday.
Last night the foreign markets were up. London was up 0.90%, Paris up 0.83% and Frankfurt up 0.66%. China was up 0.94%, Japan up 0.31% and Hang Sang up 1.43%.
The Dow should open nominally higher as oil is extending its advance. The 10-year is up 6/32 to yield 2.30%.
Ken Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
