Good morning, after rallying yesterday on dovish comments that lowered rate hike expectations, U.S. stocks are under pressure again as we are seeing a pretty severe sell off in the equity markets, with global volatility ramping up and oil prices falling we are seeing a DOW down over 250+ in early trading. Treasuries are down as well as the FNMA 3.0% coupon is currently down 6/32 as of 9:01 am.
Small business optimism slips
The National Federation of Independent Business (NFIB) Small Business Optimism Index for August dipped to 94.4 from July’s 94.6 level, and compared to the Bloomberg forecast of a modest rise to 94.8.
Treasuries are dipping in late-morning action, with the yield on the 2-year note flat at 0.77%, while the yields on the 10-year note and the 30-year bond are ticking 1 basis point higher to 1.67% and 2.40%, respectively. Schwab’s Chief Fixed Income Strategist, Kathy Jones offers her latest analysis of the interest rate environment in her article, Negative Interest Rate Policy: What Is It and Could It Happen Here?
Also, with global market volatility picking up as of late, Schwab’s Chief Investment Strategist, Liz Ann Sonders offers her latest articles, Is That All?, and All Summer Long: Will the Extreme Lull in Volatility Persist?. Liz Ann notes that since the beginning of 2015, we have been in this loop—moving frequently between easy and tight financial conditions, which have triggered the moves between a dovish and hawkish Fed. “As I’ve been saying for some time, I don’t see how we extricate ourselves from this loop; while it’s likely to remain a source of more frequent bouts of volatility.” For more on this topic, see our latest article, Fed Uncertainty Brings Volatility to Markets Europe turns lower as global uncertainty persists
Courtesty of PRMG 9/13/2016