Daily Market Color

Market Moves Forward Despite Geopolitical Concerns


Optimism Dominates

All three major US equity indices closed higher on the day, with investors confident that, in spite of trade wars and other geopolitical tensions, the market will continue to march higher.  The DJIA and the S&P 500 climbed 0.35% and 0.24%, respectively, while the DJIA eked out a slight gain at +0.06%.   US Treasuries rallied 2-4 bps across the curve, with the 10yr US Treasury Note closing at a yield near 2.82%, 4bps lower than where it closed on Friday.  In foreign exchange markets, the US Dollar (USD) fell 0.3% vs both the Euro (EUR) and the British Pound (GBP).  Crude oil futures rose on the day, gaining 0.9%, to close at $66.47/barrel.



FOMC Minutes and Jackson Hole

This week Jackson Hole, the tranquil town nestled in the Teton mountains of Northwest Wyoming, will host the Kansas City Fed’s annual Economic Policy Symposium.  Before Chair Jerome Powell can speak to those in attendance, the minutes from the most recent FOMC meeting will be released to the public.  While there are no surprises expected in the FOMC minutes, the release will be closely scrutinized for any cues as to potential near term policy movement.



On Friday at 10am Eastern / 8am Mountain time Chair Powell will address the attendees at this year’s Symposium.  While generally this meeting is more about a sharing of ideas rather than the setting of new monetary policy, the meeting has in the past served as a place where new ideas on policy have been explored.  One such topic this year could be the issue of an accelerated unwind of the Fed’s balance sheet.  The official theme this year is  “Changing Market Structure and Implications for Monetary Policy”.  Attendees include mostly central bankers, academics and members of the Federal Reserve System.  A small number of attendees include members of the media, financial institutions and government.  


Venezuela Devalues Currency

Oil rich Venezuela implemented a plan to devalue  its currency by approximately 96%.  In addition the country plans to increase gas prices to international levels and to pass a 3,000% increase in the minimum wage.  “I want the country to recover and I have the formula. Trust me,” Maduro said.  The International Monetary Fund (IMF) has estimated that the rate of inflation could be greater than 1 million percent this year.  The situation remains highly volatile and precarious as these moves could in fact end up adding to the chaos and uncertainty.



Greece’s Graduation

Add August 20th, 2018 to the list of historic dates in Greece, as today the government will officially end the bailout program that it has been a participant in for much of the last decade.  Since 2010, Greece has received roughly 290 billion euros ($331 billion) worth of bailout funds from members of the euro zone and International Monetary Fund to help rebalance its economy that has experienced a prolonged recession and four different government structures in the same time period.  “Greece can stand on its own feet,” announced Mario Centeno, the European Stability Mechanism’s chairman, this morning.  Looking ahead, there still remains a significant amount of uncertainty within Greece’s economy, as many of the nation’s small businesses crumbled during the recession, and unemployment remains stubbornly high near 20%.  


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