Daily Market Commentary

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Weekly Relative Value

Published at the top of each week by Balance Sheet Solutions, Weekly Relative Value tracks market and economic trends, analyzes key releases and watches ongoing political developments.  

Commentary prepared by Balance Sheet Solutions, LLC, a wholly owned CUSO of Alloya Corporate Federal Credit Union. Balance Sheet Solutions is a leading broker/dealer, investment advisor and ALM risk management consultant to credit unions.

Friday, October 20, 2017 at 8:00 a.m. CST
Commentary prepared by Tom Slefinger, SVP, Director of Institutional Fixed Income Sales, Registered Representative of ISI*, Balance Sheet Solutions

Market Indications

Other Market Indicators

2s/5s Tsy Spread 0.44 +0.01
2s/10s Tsy Spread 0.80 +0.01
2s/30s Tsy Spread 1.31 +0.01

DJIA-30   23163.04 +5.44
NASDAQ 6605.07 -19.15
S&P-500 2562.10 +0.84

Dollar Idx 93.40 +0.14
CRB Idx 183.95 -0.12


Today's Market Commentary

Recap – U.S. stocks eked out a gain to finish at a fresh all-time high. Gains in defensive shares offset declines sparked by Apple Inc. Treasuries rose and the dollar extended losses after a report from Politico that President Donald Trump is leaning toward Jerome Powell as the next Fed chairman. The S&P 500 wiped out a slide of 0.5% to close higher for a fifth straight day. The Nasdaq Composite Index fell the most in three weeks with Apple pacing declines after a report that the iPhone maker was dialing back orders. The CBOE Volatility Index held above 10, but trimmed a jump of more than 15%. Ten-year Treasury yields fell to 2.31% and gold approached $1,290 per ounce. West Texas Intermediate crude fell 1.3% to $51.36 a barrel. Gold increased 0.4% to $1,286.32 an ounce. Copper declined 0.3% to $3.1675 a pound.

Trump Encourages Obamacare Effort as Bill Gains Support – President Donald Trump said he’s supportive of the work lawmakers are doing to help temporarily stabilize Obamacare’s insurance markets as a bill to do so was introduced Thursday with broad bipartisan support in the Senate. “I respect very much the two senators you’re talking about, I love that they’re working on it,” Trump said at the White House Thursday when asked about his position on the bill. Shortly after Trump’s comments, Tennessee Republican Lamar Alexander and Washington Democrat Patty Murray introduced their stabilization bill with 22 senators, half of whom are Republicans. That broad backing could give the package momentum in the Senate.

Senate Banking Chairman Says Yellen Fed Too Slow to Raise Rates – Senate Banking Chairman Mike Crapo wants changes in U.S. monetary policy, saying in an interview that the Federal Reserve under Chair Janet Yellen had been too slow to raise rates. The Idaho Republican said in an interview Wednesday he is not weighing in on whether Yellen should be reappointed or which names on President Donald Trump’s shortlist to replace her he would prefer. “I have disagreed very strongly with the policies, like quantitative easing and the liberal policies that we’ve seen,” Crapo said. “I would like to see the Fed change direction,” he said.

Catalans Consider Proclaiming Independence as Soon as Next Week – The leaders of Catalonia’s separatist movement are considering proclaiming independence as early as next week as they debate their response to the latest offensive from the government in Madrid. “We should take a decision in the next days,” said Jordi Xucla, a Catalan deputy for the PDeCAT party in the Spanish Parliament in Madrid. “The decision could be obviously the declaration of independence maybe in one week or in two weeks.”

The Day Ahead – U.S. economic data is light. Existing-home sales will be released at 10:00 am ET. Earnings reports keep coming. General Electric and Honeywell report ahead of the opening bell.

Market Update – Stock markets around the world are higher. Hong Kong's Hang Seng (+1.17%) led the gains in Asia, and Britain's FTSE (+0.24%) paces the advance in Europe. The S&P 500 is set to open higher by 0.23% near 2,568. The U.S. 10-year yield is up five basis points at 2.37%, and near levels last seen in July.

Economic Calendar

October 16 - 20, 2017: The Week Ahead

Future Fed Expectations
Sources: Bloomberg


Select Probabilities based on the Futures

Probability of Fed Funds rate increase on November 1, 2017 0%
Probability of Fed Funds rate increase on December 13, 2017 77%

**All quoted rates are indications and are subject to change without notice.
* ISI is a member of the FINRA/SIPC.

The information contained herein is prepared by ISI Registered Representatives for general circulation and is distributed for general information only. This information does not consider the specific investment objectives, financial situations or particular needs of any specific individual or organization that may receive this report. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities. All opinions, prices, and yields contained herein are subject to change without notice. Investors should understand that statements regarding future prospects might not be realized. Please contact Balance Sheet Solutions to discuss your specific situation and objectives.