Advisor Login Contact Us

Will Today’s Meeting Between The President And House Speaker Produce Anything of Significance?

Three-month Treasury yields are at the highest level in more than two decades amid heightened risk of a default if Congress fails to lift the debt ceiling on time.

The government sold $57 billion of the three-month securities at 5.14%, the highest for the benchmark since 2001. 

Recent Treasury auctions have suggested a level of increased concern stretching from June through the summer about the debt ceiling.

Almost all believe a default would cause a major disruption for the global economies, perhaps causing systemic changes.

Will today’s high-profile meeting between President Biden and House Speaker McCarthy produce any results?

Equites struggled to find direction in subdued trading as volume was about 20% below recent averages according to Bloomberg.

Goldman wrote that techs stocks are now trading at a 49% premium to the rest of the S & P 500, reiterating only five mega sized tech companies were responsible for 80% of 2023 S & P 500 gains.

Since mid-April, equites have traded sideways even as earnings have generally exceeded dumbed down expectations.  Goldman expressed concern about the narrowness of the advance, suggesting volatility can increase dramatically with little catalyst.

Commenting about potential monetary policy, swap rates were little changed indicating a policy rate about 70 bps below the current one by year end.  Goldman however altered its view on policy now believing that the Fed will be less aggressive in cutting rates this year than markets are predicting, inferring no policy change may occur.

Last night the foreign markets were down.  London was down 0.42%, Paris down 0.90% and Frankfurt down 0.28%.  China was down 1.01%, Japan up 1.01% and Hang Seng down 2.12%.

Futures are down about 0.4% on Chinese data suggesting that imports declined last month and nervousness over the debt ceiling.  Tomorrow the CPI is released, and inflation is expected to rise by 5.0% on a year-on-year basis.   The 10-year is up 6/32 to yield 3.48%.

Return To Index Page
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.