What we think

Newsletter: In the Markets – Week-Ending July 29
Crystal Brook Advisors
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United States: Fed governor Daniel Tarullo said he isn’t ruling out the possibility of raising interest rates this year, but declined to say how he believed the Fed should act at its next meeting on monetary policy later this month.(1) The U.S. labor market in recent years has seen gradual but continued improvement. Economists surveyed by The Wall Street Journal say maintaining that pace of advancement looks increasingly doubtful.(2)

Europe: Up to one million refugees in Turkey will receive debit cards and monthly cash transfers to help pay for food and housing under a new €348 million ($393 million) humanitarian program from the European Union.(3) ECB failed to further its QE programme. This year’s historic rally in government bonds showed signs of buckling on Friday, with the yield on German benchmark debt escaping negative territory for the first time since late July as equities in the US and Europe tumbled.(4)

Asia: OPEC’s crude-oil output declined sharply last month as Iran’s energy comeback stalled and Saudi production eased, according to data to be released by the cartel Monday.(5) Asian stock markets were mostly higher with the main exception of Japan where exporters were being buffeted by a stronger yen, which rallied as weak US data trimmed expectations for a near-term increase in US interest rates. (6)

Latin America: Mexican industrial production rose in July from the previous month as manufacturing output accelerated, while falling oil production and lagging construction continued to weigh on overall activity.(7) Cuba draws those from the U.S., but as regular flights from the U.S. get under way, carriers cope with incompatible technical systems and travelers will find most wireless devices and credit cards won’t work.(8)

Tuesday 09/06

• Bond Investors Ignore Fed Fears. Few expect any rate increase by the central bank to spark a big selloff in Treasuries.(9)
• Stocks in Europe and Asia started the week on firm footing, supported by a rise in oil prices and expectations that the Federal Reserve will keep interest rates low for longer.(10)

Wednesday 09/07

• Gold has got its shine back, rallying to two-week highs as a run of drab US data pushes back rate rise expectations.(11)
• The best-performing sectors of the year led U.S. stocks higher. Several of the moves reflected investors’ doubts that the Federal Reserve will soon raise interest rates. The dollar slumped along with financial shares and Treasury yields, while utilities and telecom companies gained.(12)

Thursday 09/08

• Facebook topped $2 billion in quarterly profit, six months after crossing the billion-dollar mark for the first time. User numbers and ad dollars surged.(13)
• Since crude prices hit a year-high above $52 a barrel in June they have slipped almost 20%, leaving them on the cusp of a new bear market.(14)

Friday 07/29

• Average fixed mortgages rates edged lower in the latest week, according to the latest Freddie Mac survey. The 30-year fixed rate mortgage averaged 3.44% for the week ending Sept. 9, down from 3.46% in last week’s survey, and the 15-year fixed rate averaged 2.76%, down from 2.77% a week ago. (15)
• Oil prices shot upward, 4.7%, with their largest daily gain since April, after weekly data showed a sharp and surprising decline in U.S. stockpiles of crude oil and fuel.(16)

Market Close
U.S. stocks sold off on Friday in its worst trading session since Brexit as hawkish comments from Boston Fed President Eric Rosengren suggested that the Federal Reserve could resume raising interest rates soon, turning off the flow of easy money into the market. The S&P 500 SPX, -2.45% sank to its lowest close in two months, falling 53 points, or 2.5%, to 2,127 for a weekly loss of 2.4%. The Dow Jones Industrial Average DJIA, -2.13% shed nearly 400 points, or 2.2%, to end at 18,085, falling 2.2% for the week, while the Nasdaq Composite Index COMP, -2.54% skidded 134 points, or 2.5%, to close at 5,125, bringing its weekly loss to 2.4%.(17)

Contributor: Loren Lozano

Sources:
(1) Wall Street Journal

(2) Wall Street Journal

(3) Wall Street Journal

(4) Financial Times

(5) Wall Street Journal

(6) Financial Times

(7) Wall Street Journal

(8) Wall Street Journal

(9) Wall Street Journal

(10) Wall Street Journal

(11) Financial Times

(12) Wall Street Journal

(13) Financial Times

(14) Wall Street Journal

(15) Seeking Alpha

(16) Wall Street Journal

(17) MarketWatch