Remembering 9/11. LPL Research pauses today to reflect and remember 9/11. Our team sends positive thoughts to first responders, families, and so many in our industry who were affected.
Stocks take a breather. The S&P 500 Index moved less than a point for the second straight day on Tuesday. U.S. stocks may have looked calm on the surface, but the small closing move masked a 1% trading range during the day and a strong rotation from momentum to value stocks. The S&P 500 is still relatively unchanged this morning, and it’s likely we’ll need to see another macro development to push equities in a decisive direction. That catalyst may come Thursday in the European Central Bank’s (ECB) monetary policy announcement. We expect the ECB to unveil some sort of accommodation: either a new round of quantitative easing, even more negative rates, or both.
Yields rally. Fixed income markets have been more exciting than stocks recently. The 10-year Treasury yield climbed 27 basis points (0.27%) over five trading sessions through Tuesday, its biggest such gain since November 2016. We still think the 10-year yield’s fair value is much higher than current levels, but we wouldn’t be surprised to see yields take a breather here after such a large move.
PPI beats expectations. The core Producer Price Index (PPI), which excludes food and energy prices, rose 2.3% year over year in August, beating consensus estimates for a 2.2% gain. Inflation data has been in focus recently as investors have searched for clues on the health of the U.S. economy and monetary policy amid signs of slowing globally. Consumer inflation and wages have picked up over the past few months, and overall, U.S. inflationary pressures still look healthy. We’ll get more details on the state of inflation in Thursday’s Consumer Price Index (CPI) report.
Time for gold to shine? Gold is poised for its best year since 2010 amid concerns of a global slowdown, negative-yielding debt, inverted yield curves, and central banks stepping up gold purchases. Even though gold has had a strong year, we still see reasons why gold’s rally could continue. We’ll dig into gold more today on the LPL Research blog.
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The gold market is subject to speculation and volatility as are other markets. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, geopolitical events, and regulatory developments. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.
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