Market Update: Friday, September 22, 2017


Market Recap

  • Markets dip as traders digest Fed meeting data; Dow -0.2%, S&P 500 Index -0.3%, Nasdaq -0.5%.
  • Industrials, financials the only sectors to post gains; industrials helped by strength from its largest component; financials continue run on steeper yield curve prospects, deregulation hopes.
  • Low NYSE exchange volume (86.6%); breadth negative (1.4:1).
  • 10-year Treasury yield flat at 2.28%. Modest gains for investment-grade corporates.
  • Commodities COMEX gold (-1.7%) to $1294/oz.; WTI crude held near flat ~$50.70/bbl.

Overnight & This Morning

  • Asian markets lower after North Korea’s latest statements regarding its nuclear program.
  • Europe slightly higher mid-day after strong manufacturing data from Germany, France.
  • S&P 500 flat in early trading. Largely ignoring fresh rhetoric from North Korea (details below).
  • Traditional risk-off assets getting support from geopolitical concerns. Yen, Swiss franc, gold all modestly higher. 10-year Treasury yield -3 basis points (0.03%) to 2.25%.
  • Industrial metals tumble lower. Copper (-1.7%), gold (+0.2%) $1297/oz., WTI crude (-0.2%) $50.40/bbl.


  • Geopolitics back in focus. Most Asian markets were lower overnight as investors speculated that North Korea may respond to President Trump’s UN speech with a hydrogen bomb test in the Pacific Ocean. This also follows more sanctions against North Korea, and an order from President Trump to Chinese banks to stop doing business with the North Korean regime.

Macro Notes

  • Bank of Japan (BOJ) leaves policy unchanged. As expected, the BOJ maintained the status quo following its monetary policy meeting. However, a new board member dissented from the otherwise unanimous vote, suggesting additional asset purchases would be needed for the BOJ to achieve its 2% inflation target. In contrast, other members foresee either no need to change the current terms of the bank’s asset purchase program or a potential need to decrease asset purchases, though not any time soon. Liquidity in the country’s government bond market is another source of debate given that the central bank holds a ~40% share, though the board assured markets that there were no issues.
  • Existing home sales missed expectations in August. On the economic front we saw existing home sales, which came in at 5.35 million, below consensus of 5.48 million and down 1.7% month over month. Year over year they were up 0.2%. Part of the miss was likely due to Hurricane Harvey, with the South down the most at -5.7% month over month.
  • Crude oil inventories show a build, while RBOB Gasoline shows a drawdown for the week of September 15. The EIA‘s Petroleum Status Report also showed a build in crude oil inventories, but this report was also likely impacted by Hurricane Harvey, which caused the shutdown of major refineries on the gulf coast. However, any weakness that this report may have caused was offset by more talk of supply cuts from major OPEC and non-OPEC countries, which triggered oil to move higher and close just above $50/bbl. for the first time since the end of July.


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  • Markit US Manufacturing & Services PMI (Sept)
  • Williams (Dove)
  • George (Dove)
  • Kaplan (Hawk)
  • France: GDP (Q2)
  • France: Markit France
  • France: Manufacturing & Services PMI (Sept)
  • Germany: Markit Germany
  • Germany: Manufacturing & Services PMI (Sept)
  • Eurozone: Markit Eurozone
  • Canada: CPI (Aug)

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