Daily Market Color

Investors Display Caution Ahead of Monday’s Presidential Debate

With the current US presidential race nearly a dead heat, investors remained cautious to start the week with the first head-to-head debate set for tonight.  Scheduled for 9pm EST at Hofstra University in New York, the highly anticipated face-off between Donald Trump and Hillary Clinton may be a turning point in terms of who can convince the voters they are best suited to this job.  With a bias towards risk reduction, stock markets have declined as Treasurys rallied on the day, despite new home sales data beating estimates.  Newly constructed homes for the month of August totaled 609,000, down 7.8% from the previous month, but better than expectations of +600,000.  Also providing positive news for markets were energy prices, which rebounded strongly from the 4% drop Friday.  With the OPEC meeting in Algiers beginning today, crude oil prices jumped as investors hope for a production deal to be reached by Wednesday when the gathering concludes.  Over the past few several weeks there has been substantial speculation surrounding a potential agreement, with Saudi Arabia most recently stating that they do not expect any freeze to be established in Algiers but expressing a willingness to consider capping output as part of a coordinated deal with Iran at some point in the future. 

Abroad, European equities closed sharply down for the day, led lower by Deutsche Bank whose share price fell to an all-time low during the trading session.  Concerns over the bank’s ability to pay the $14 billion fine being sought by the U.S. Department of Justice, were further accentuated after German Chancellor Angela Merkel stated that the government would not provide any funding assistance.  In Asia, Bank of Japan Governor Haruhiko Kuroda unnerved investors by confirming that the BOJ had been unable to lower the value of the Yen with its recent monetary policies and yet had not taken more definitive steps to create the desired market impact.  Kuroda’s comments prompted a rise in the Yen, with the dollar now worth less than 101 Yen.
All three major U.S. stock indexes are currently down roughly 0.75% while Treasury yields and swap rates are lower 1-4 bps across the curve.  The rally in oil has pushed WTI crude to $46.10/per barrel and Brent crude back up to $47.50/barrel.  

Ready to start a conversation?

We offer free consultations and platform demos.

Let's Talk