Daily Market Color

Oil Surges on Inventory, Treasurys Selloff Ahead of FOMC Announcement


Crude futures advanced to a three-week high today after it was reported that crude inventories in the US declined by 2.74 million barrels last week while median forecasts had called for a 3.25 million barrel build.  If confirmed by the Energy Information Administration tomorrow, it would represent the largest weekly drawdown in more than two months.  Overall, it was the second bullish piece of news on the day for energy investors, as earlier this morning it was reported that the OPEC-led supply-cutting efforts abroad would yield successful results earlier than anticipated.  WTI crude climbed more than 2% to finish the session near $63.40/barrel. 



Equity Markets Shake off Tech Concerns to Finish Higher

All three major US stock indices finished in positive territory today, with the DJIA (+0.47%) as the best performer on a relatively quiet day ahead of tomorrow’s FOMC meeting announcement – Jerome Powell’s first as Fed Chair.  For the second straight day, the technology sector weighed on equity markets as investors continued to assess the impact of Facebook’s alleged privacy breach and its future impact on tech and social media.  Gains in the tech-heavy NASDAQ were limited to 0.25% while the S&P 500 inched 0.15% higher.  Treasurys sold off for a second straight day, as yields/swap rates increased an additional 3-4bps across the curve, bringing the 10-year note yield near 2.90%.  The US dollar posted small gains vs the Euro (EUR), British Pound (GBP) and Japanese Yen (JPY), while experiencing a modest decline against the Swiss Franc (CHF).



It’s been more than a month since the last time Congress kicked the can down the road on approving a government spending bill.  This go around, lawmakers will be hard-pressed to pass a spending budget by midnight on Friday in order to avoid a shutdown of federal agencies yet again.  The key areas of impasse currently include:

  • Border wall: Republican lawmakers requested $25 billion for construction of the wall
  • “DREAMERS”: Initial negotiations failed after the qualified individuals would only be given 2.5 years protection from deportation
  • NY/NJ Tunnel: Known as the “Gateway Program”, there has been debate over whether federal spending (~$900 million) should be used for a new train tunnel between New York and New Jersey


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