MONDAY WAS THE INVERSE OF FRIDAY…AND THEN THERE IS TODAY’S BOJ DEBT AUCTION

Equities rose following reports that the Administration will not target Chinese capital.  Many firms have opined that such action could be potentially disastrous, a view that I share.  Beijing did its part on Monday vowing to keep opening its financial markets and encouraging foreign investment.

It is my understanding China and the US will meet on October 10 to discuss trade and perhaps capital flows.

The drama in Washington is still a non-market event perhaps the result of the probability of obtaining 67 votes in the Senate as very low.  As noted yesterday some have used the phrase “Kangaroo Court” to describe the fervent rush to judgement.

The more sanguine observers have stated the strategies currently being utilized are a slippery slope, strategies that more often identified with tolaterian regimes and banana republics.

Treasuries were essentially unchanged with attention focused upon this week’s release of the ISM Manufacturing Index, various employment surveys and the ISM Non-Manufacturing Index.  All of which can greatly influence macroeconomic perceptions.

Last night the foreign markets were mixed.  London was down 0.45%, Paris down 0.29% and Frankfurt down 0.18%.  China was down 1.06%,  Japan up 0.59% and Hang Sang up 0.53%.

The Dow should open nervously unchanged.

The global bond market—including the US Treasury—is rattled by a weak Japanese debt offering, the weakest since 2016. The Japanese central bank has indicated that it may potentially slash bond purchases and the government pension fund’s plan to buy more foreign debt to offset the impact of negative yields.

In my view it is a huge psychological change, a change that according to Bloomberg is creating massive margin calls given the scope and magnitude and breadth of the sell off.  The 10-year is off almost a point to yield 1.73%.  The thirty year is off about 1 ½ points.

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.