A VOLATILE DAY ESPECIALLY IN TREASURIES

Wow! Yesterday was a volatile day. Commenting first upon the sovereign debt market, global sovereign debt markets were roiled by Japan’s announcement that it may stop purchasing its debt because of negative yields and begin purchasing “other debt.”

The selloff was building to “tidal wave proportions.” At one time the US 30-year Treasury was off about 2 points until the release of September’s ISM data. The UST rallied and closed posting nominal gains.

The manufacturing data was considerably lower than expected falling to the lowest level since June 2009.  The 47.8 reading was lower than August’s 49.1 post. Any number under 50 suggests a contracting manufacturing sector.

Manufacturing is only 10% of the economy but is a top tier indicator to other parts of the economy. The strong dollar and trade war are the accepted reasons for the decline.
I think it is noteworthy historically an ISM in the “40’s and high 30’s” are typically associated with an economy wide recession.

Equities were the inverse of Treasuries, reversing moderate gains to close about 1.2% lower.

Today is the release of the ADP Private Sector Employment Survey. Last month the Survey indicated considerable strength, strength that was not reflected in the BLS Labor report. Will there be some giveback in September? Analysts are expecting a 140k increase.

More importantly how will the statistics influence outlooks?
Last night the foreign markets were down. London was down 2.04%, Paris down 1.69% and Frankfurt down 1.42%. China was down 0.92%, Japan down 0.49% and Hang Sang down 0.19%.

The Dow should open moderately lower on economic concerns. The 10-year is up 4/32 to yield 1.62%.

kent
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. 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. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.