Daily Market Commentary

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Weekly Relative Value

Published at the top of each week by Balance Sheet Solutions, Weekly Relative Value tracks market and economic trends, analyzes key releases and watches ongoing political developments.  


Commentary prepared by Balance Sheet Solutions, LLC, a wholly owned CUSO of Alloya Corporate Federal Credit Union. Balance Sheet Solutions is a leading broker/dealer, investment advisor and ALM risk management consultant to credit unions.


Friday, July 21, 2017 at 8:00 a.m. CST
Commentary prepared by Tom Slefinger, SVP, Director of Institutional Fixed Income Sales, Registered Representative of ISI*, Balance Sheet Solutions


Market Indications


Other Market Indicators

2s/5s Tsy Spread 0.47 +0.00
2s/10s Tsy Spread 0.91 +0.00
2s/30s Tsy Spread 1.49 -0.01

DJIA-30 21640.75 +66.02
NASDAQ 6385.04 +40.74
S&P-500 2473.83 +13.22

Dollar Idx 94.81 +0.21
CRB Idx 178.66 +1.78

 

Today's Market Commentary

Recap – Stocks were mixed on Thursday. While the NASDAQ increased by only 4.96 points (0.08%), it was enough for another record close. The Dow and S&P both went the other way, also by slim amounts. The Dow closed down 28.97 points (-0.13%) while the S&P gave back -0.38 points (-0.02%). In Europe, the bourses were all slightly lower except for the FTSE 100 in London, which posted a 0.77% gain. Asian markets all closed higher. In other markets, oil was down slightly closing at $46.51 per barrel. In currencies, the euro gained on the belief that the European Central Bank (ECB) will start easing back on its stimulus program while the dollar continued to slide. The dollar slide is mostly attributable to the ongoing political turmoil in Washington, D.C.

Economic News – Thursday was quiet with regards to economic data. The weekly initial jobs claims came in at 233,000, below expectations of 245,000. This continues the string of relatively low weekly claims numbers. In other news, the Philadelphia Fed Business Outlook was positive at a reading of 19.5. Although a decent number, this was below expectations of 23.0 and down from last month’s reading of 27.6.

Looking at the Day Ahead – There are no major economic releases today.

The Markets This Morning – Bonds are rallying again, with the three-year Treasury up one tick; the five-year Treasury up two ticks; and the 10-year Treasury up five ticks. The yields are currently 1.344%, 1.805% and 2.239% respectively. Equities are down both in the U. S. and overseas. The culprit is the growing belief that the political climate in the U.S. will delay or prevent any of President Trump’s economic agenda from getting off the ground. This is weakening the dollar further, which is raising the relative value of the euro. The euro’s rise in value is causing concern this will hurt European exports – car manufacturers in particular.
  

Economic Calendar

July 17 - 21, 2017: The Week Ahead

Future Fed Expectations
Sources: Bloomberg


 

Select Probabilities based on the Futures

Probability of Fed Funds rate increase on July 26, 2017 0%
Probability of Fed Funds rate increase on September 20, 2017 10%

**All quoted rates are indications and are subject to change without notice.
* ISI is a member of the FINRA/SIPC.

The information contained herein is prepared by ISI Registered Representatives for general circulation and is distributed for general information only. This information does not consider the specific investment objectives, financial situations or particular needs of any specific individual or organization that may receive this report. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities. All opinions, prices, and yields contained herein are subject to change without notice. Investors should understand that statements regarding future prospects might not be realized. Please contact Balance Sheet Solutions to discuss your specific situation and objectives.