Daily Market Color

US Treasurys Edge Higher, Dollar Declines Ahead of Jackson Hole

Both stock and bond markets traded within a tight range to open the week, as the ongoing tensions with North Korea and political drama in the White House continue to temper investors’ economic expectations, keeping trading volumes nearly 20% below the 30-day average.  All three major US stock indices fluctuated right around unchanged on the day, with the S&P 500 and DJIA finishing up roughly 0.1%, and the Nasdaq down 0.05%. Treasury prices increased slightly, with yields/swap rates down 1-2bp across the curve.  The US dollar fell close to its lowest level of the month, declining 0.3% for the trading session against major currencies.  With a limited amount of meaningful economic data due to be released this week, attention will be focused on the Economic Policy Symposium in Jackson Hole, which kicks off on Thursday and will feature speeches from Fed Chair Janet Yellen and ECB President Mario Draghi this Friday.  The relentlessly soft inflation data reported in most industrial nations is expected to be a central topic of discussion for the central bank heads.  



In commodities, crude oil prices declined 2% on the day, reversing the bulk of Friday’s rally.  Excess crude inventories remain a primary concern for the traded market, with increased US production generating a significant amount of future price uncertainty.  Market prices bounced a bit off of news this weekend that production at the Shahara oil field in Libya, was shut down due to a blockade /  protest by armed groups in the region.  Within metals trading, gold continued its monthly surge, as futures rose 0.45% today in sympathy with the lingering geopolitical tensions.  Gold is up 3% for the month and over 12% YTD.


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