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Will Today’s Data Confirm or Deny the Rising Sentiment that the Overnight Rate Will be 0.50% by September 2015?

Will today’s data confirm or deny the rising sentiment that the overnight rate will be 0.50% by September 2015?  Fed Funds futures which are a gauge of market sentiment now suggest a 79% chance that such will occur.  That compares with a 63% chance at the conclusion of the last FOMC meeting.

Some have commented about the volatility in views for did not August’s employment data released last Friday lengthen the expected time frame?

To write the obvious, all are on edge about monetary policy for a myriad of reasons including the now accepted view that a significant amount of the gains is the result of an extremely accommodative Fed and the fact that never has a change in monetary policy been attempted at current levels.  Mistakes will be made given the lack of benchmarks.

As noted above, today’s data can influence views about monetary policy as weekly jobless claims are reported.  Policy is mono dependent upon jobs and according any statistic that involves employment will have an outsized influence.

Commenting upon yesterday’s market activity, trading was relatively subdued.  Treasuries declined in price again, marking the longest downturn in prices since spring and yields are now at the highest level in about a month.  Equities were quietly higher led by the technologies.

Last night the foreign markets were mixed.  London was down 0.40%, Paris down 0.26% and Frankfurt up 0.02%.  Japan was up 0.76%and Hang Sang down 0.17%.

The Dow should open flat with attention focus upon last night’s speech by President Obama and its infinite number of possible intended and unintended consequences.  The 10-year is up 5/32 to yield 2.53%.

Today is 9/11.  Please take the time to reflect about the significance of today and please pay respect to those who made the ultimate sacrifice for our country.


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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.