Market Update: Tuesday, September 25, 2018

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Daily Insights

  • LPL Market Signals Podcast (NEW). Listen to the latest Market Signals podcast, in which Chief Investment Strategist John Lynch and Senior Market Strategist Ryan Detrick discuss the potential effects of midterm elections, recent rate hikes, and other events on investors and the economy. Market Signals by LPL Financial is now available on iTunes, Google Play, and Spotify. Please join our discussion on social via #LPLMarketSignals

  • LPL Research in the media. Senior Market Strategist Ryan Detrick was on both CNBC and Yahoo! Finance yesterday. On CNBC’s Power Lunch he discussed the lack of volatility in the face of scary news headlines, strong fundamentals, and trade. On Yahoo! Finance Midday Movers he discussed Washington drama, Dow new highs, and emerging markets.

  • 10-year yield keeps climbing. The 10-year Treasury yield rose for a fifth straight day yesterday, its longest streak of gains since May, to 3.10%. Investors around the world have pivoted back into risky assets recently, boosting the MSCI All-Country World Index to its second straight weekly gain last week (and fourth in five weeks). The 10-year yield’s resilience is especially impressive given it’s trading a few basis points away from a 7-year high. However, we believe that longer-term yields have limited upside this year, and we expect the 10-year yield to end 2018 in the 2.75%-3.25% range.*

  • Treasury futures still record short. Even as the 10-year yield climbed for a fourth straight week, net positioning across the Treasury futures market for non-hedging investors (i.e. those speculating on the direction of rates) remained the most short on record through September 18. Speculative investors in Treasury futures have been steadfast in predicting Treasury prices will decline (pushing rates higher), even after being burned by the short 10-year yield trade for most of this year.

  • China selling Treasuries. China’s Treasury holdings fell to $1.17 trillion in July, a six-month low, as the country has begun shedding U.S. government debt amid a trade spat with the U.S.. On the LPL Research blog, due out later today, we explain why we don’t expect China to unload a significant amount of Treasuries, even if trade tensions escalate further.

LPLResearch-Monitoring-the-Week-Ahead

Click Here for our detailed Weekly Economic Calendar

Tuesday

Wednesday

  • New Home Sales (MoM, August)
  • Federal Reserve Policy Rate Decision & Press Conference (September)

Thursday

Friday


IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

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All company names noted herein are for educational purposes only and not an indication of trading intent or a solitication of their products or services. LPL Financial doesn’t provide research on individual equities.

All performance referenced is historical and is no guarantee of future results.

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Index data obtained via FactSet

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