THE DOG DAYS ARE CONTINUING

Treasuries climbed and the dollar slumped after data showing anemic expansion of the service sector bolstered speculation the Federal Reserve will not increase interest rates later in the month.  Fed Funds futures are now suggesting a 24% chance, down from over 55% last week.

The ISM non manufacturing index indicated service industries expanded in August at the weakest pace in six years.  While this is a relatively immature data point that has a history of indicating false weakness/strength, because of Fed statements, broad based conclusions are made on every tier I statistic.

As indicated, the yield on the 10-year Treasury fell by 6 basis points or retraced half of August’s increase in yields.  As noted last week, prices fell in the 10-year by the greatest amount since June 2015.  Yields rose 13 basis points.

The dollar is now down about 5.1% for the year.  Eight months ago consensus expected the dollar to continue its multiyear advance.

Crude closed nominally higher, the result of the decline dollar and speculation that something might happen at the month end OPEC meeting.

What will happen today?

Last night the foreign markets were mixed.  London was up 0.09%, Paris up 0.26% and Frankfurt up 0.35%.  China was up 0.04%,  Japan down 0.41% and Hang Sang down 0.19%.

The Dow should open little changed.  Crude is up 1% and the 10-year is unchanged

 

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.