S&P 500 FINANCIALS INDEX
| Value | 182.27 | |
| Change | 1.66 (0.9%) |
The MLP index was down 1 to the 318s but off its AM low at 317. The REIT index rose almost 2 to 202+, still in a sideways trading range since Mar. Junk bond funds slipped fractionally & the VIX was also down a fraction to the 26s, little changed in recent weeks. € was flattish at $1.26¾.
Alerian MLP Index --- 2 months
Dow Jones REIT Index --- 2 months
VIX --- 2 months
10-Year Treasury Yld Index --- 2 months
Oil tumbled, its worst month since May, on signs US economic expansion is slowing & supplies of crude are growing. However, gold futures topped 1,250 an ounce, capping the biggest monthly gain since Apr, on speculation the dollar will decline, boosting the allure of gold as a safe haven investment. Worriers are streaming back to gold!
| CLV10.NYM | ..Crude Oil Oct 10 | ..71.73 | .. 2.97 ......(4.0%) |
| GCU10.CMX | ..Gold Sep 10 | ..1,247.30 | .. 10.20 ......(0.8%) |
Ben Bernanke
Photo: Bloomberg
Federal Reserve (FED) officials signaled at the Aug meeting that they would consider going beyond a modest program to purchase gov debt if necessary to boost the economy as the FED recognized that the economy could need further stimulus beyond the debt purchases (intended to lower interest rates on a range of consumer loans). But the minutes did not spell out what new steps might be taken. FED officials focused attention on the modest move the FED did take at the meeting, which would invest a small amount of proceeds from its huge mortgage bond portfolio in Treasury securities. Some FED officials argued that reinvesting proceeds from the Fed's holdings of mortgage securities "could send an inappropriate signal to investors about the committee's readiness to resume large-scale asset purchases," the minutes said. In the end, FED board members & regional bank presidents, voted 9-1 to support the modest easing move. The only dissent came from Kansas City Federal Reserve Bank President Thomas Hoenig. The minutes said that the committee believed that the most likely outcome for the economy was that it would continue to grow & would avoid a destabilizing bout of deflation, when prices & wages decline. But the panel said it was prepared to go further to guard against either a return to recession or deflation. The minutes also said the FED panel agreed it would "need to consider steps it could take to provide additional policy stimulus tools if the outlook were to weaken appreciably further."
Fed Saw Risk August Decision Would Send Wrong Signal
The Treasury 10-year bonds rose as yields headed for the biggest decline since the end of 2008, when the Federal Reserve slashed the key interest rate to pretty much zero in order to revive the economy. The important point is that money used to buy Treasuries is not buying stocks which keeps stock averages in the doldrums.
Treasury Securities
| U.S. 3-month | 0.13% | |
| U.S. 2-year | 0.47% | |
| U.S. 10-year | 2.47% |
Markets continue to just drift along which is likely how the rest of the week will play out. Some officials at the FED were concerned about a further slowdown in the economy yet signaled no plans to resume large-scale asset purchases. This is more uncertainty that stock markets do not take well. In Aug, Dow dropped 450 (4%) following July which was a good month. Now it's back near its lowest levels since last Nov & has yet to test its lows in the 9600-9800 area. For what it's worth, Sep is statistically the worst month for stocks & Oct is remembered for some its worst days in stock market history.
Dow Jones Industrials --- 2 months
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