Repo Market’s Perfect Storm

Market Blog
September 27, 2019

Recent stress in the short-term repurchasing (repo) market has raised concerns about a potential “liquidity crisis” in the financial system.

As shown in the LPL Chart of the Day, interest rates on repo market agreements jumped last week amid a shortage of cash available to lend, forcing the Federal Reserve (Fed) to inject liquidity into the market to stabilize rates.

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Market Update: Fri, Sep 27, 2019 | LPL Financial Research

Daily Insights

Range-bound stocks. U.S. stocks are higher this morning, but the S&P 500 Index is poised for its second straight week of losses. The S&P 500 has yet to break out from a 2.5% trading range it has been in since September 5, and there has been modest weakness under the surface as defensive and large cap stocks have outperformed cyclicals and small cap stocks. Continue reading

Germany on the Cusp of Recession

Economic Blog
September 26, 2019

The German economy, typically a key growth engine for Europe, is sputtering. In fact, it may be entering a recession as we speak.

As shown in the LPL Chart of the Day, German gross domestic product (GDP) is expected to grow only 0.1% in both the third and fourth quarters, according to Bloomberg consensus forecasts, after contracting modestly in the second quarter. Most economists use two consecutive quarters of declining GDP as the benchmark for measuring recession.

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Economy Surprising to the Upside

Economic Blog
September 25, 2019

Recent stock gains may not just be about a better trade tone or renewed central bank support. U.S. economic fundamentals have also improved.

The Citi U.S. Economic Surprise Index, a running average of economic data compared to economists’ forecasts, has recently reached levels not seen since April 2018, as shown in LPL Research’s Chart of the Day. Stocks have climbed back near records as data has improved, and stronger economic trends could provide support for further advances.

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Market Update: Wed, Sep 25, 2019 | LPL Financial Research

Daily Insights

Stocks fall. The S&P 500 Index broke out of its recent range, falling 0.8% on Tuesday amid negative trade headlines and news that an impeachment inquiry was being considered against President Donald Trump. Before yesterday’s decline, the S&P 500 had stalled at 3,000, closing within 1% of that level for 13 straight trading sessions. Continue reading

A Two-Week Rollercoaster in Yields

Market Blog
September 24, 2019

As shown in the LPL Chart of the Day, the 10-year Treasury yield jumped 34 basis points (0.34%) in the week ending September 13, then gave back half that gain in a 17 basis point (0.17%) slide last week. The benchmark yield hasn’t moved at least 15 basis points (0.15%) in two consecutive weeks since November 2016.

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Market Update: Tues, Sep 24, 2019 | LPL Financial Research

Daily Insights

Stocks rise on trade optimism. U.S. stocks are higher this morning amid news that face-to-face trade talks between the U.S. and China will begin on October 7. The U.S. and China have been expected to meet in October, but investors have been skeptical of the meeting after China canceled visits to U.S. farms last week. Continue reading