Treasuries continued their selloff as a rout in global bonds resumed following a comment from the ECB of higher inflation for the region. Oil fell even as oil inventories dropped by an amount greater than expected and are now down for five consecutive weeks, the longest stretch since August. As noted yesterday, the market is expecting OPEC not to lower production at tomorrow’s meeting.
Equities advanced on light volume on increasing optimism that there will be a compromise with Greece. Equites were also encouraged by the Beige Book which stated the economy expanded in the last two months even as manufacturers in some regions took a hit from a stronger dollar and a slowdown in energy related investment.
Will today’s trading be of any consequence or will all be sidelined before tomorrow’s potentially pivotal day?
Last night the foreign markets were down. London was down 1.32%, Paris down 1.78% and Frankfurt down 1.43%. Japan was up 0.07% and Hang Sang down 0.38%.
The Dow should open significantly lower as European yields continue to rise which causes a rise in Treasuries thus lowering potential equity values as equity values are primarily predicated by cashflows discounted by some interest rates. Moreover a Greek debt deal is still elusive albeit it appears an agreement is closer today than yesterday. The 10-year is off 5/32 to yield 2.39%.
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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.
