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Treasuries rallied, the dollar pared gains and equities were mixed as the Federal Reserve kept interest rates unchanged and reiterated a slow pace of tightening even as the economy shows signs of improvement.

In my view, there was no real surprises in the Fed statement as it has commented many times that it is leaning towards hiking rates but the timing of such is unknown.  Some think the central bank’s statement was a little more hawkish than anticipated, a view that I do not necessarily share.  Any changes in monetary policy have always been data dependent and the data is suggesting greater strength.

Earnings have been mixed with several high profile companies both exceeding and missing expectations.

Generally speaking markets are essentially flat during the last five days, five days which could have produced considerable volatility if statements/results differed greatly from the consensus view.

What will happen today?

Last night the foreign markets were down.  London was down 0.30%, Paris down 0.25% and Frankfurt down 0.08%.  China was down 0.15%,  Japan down 1.13% and Hang Sang down 0.20%.

The Dow should open flat.  Will tomorrow’s preliminary release of second quarter GDP impact the averages?   The 10-year is off 4/32 to yield 1.52%.

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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.