Friday, December 27, 2013

Markets close the week with limited fluctuations

Dow slid 1, advancers & decliners were pretty much equal & NAZ lost 10. The MLP index rose 3+ to the 458s & the REIT index fell about 1 to the 265s.  Junk bond funds slid back & Treasuries were weak with the 10 year yield reaching 3%.  Oil went over 100 & gold was marginally higher, but still just above 1200.

AMJ (Alerian MLP Index tracking fund)

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China's benchmark money-market rate posted its biggest weekly drop since 2011 as central bank cash injections & fiscal fund transfers boosted supply.  The yuan rose to the strongest level in 20 years.  The 7 day repurchase rate tumbled 252 basis points since Dec 20, the biggest decline since Jul 2011, to 5.08% in Shanghai.  The gauge of funding availability in the banking system fell 25 basis points today.  The People’s Bank of China (PBOC) added a net 29B yuan ($4.8B) this week by auctioning 7 day reverse repurchase contracts on Dec 24.  There were no injections last week, prompting the biggest surge in the rate in almost 3 years.  The central gov transfer of fiscal funds to local administrations boosted cash at commercial banks.  The yuan strengthened beyond 6.07 to the dollar for the first time, touching 6.067 before trading 0.1% higher at 6.0686.  The PBOC raised the yuan’s reference rate 0.17% to 6.105 per dollar today, the strongest since a peg to the greenback ended in Jul 2005.

China Money Rate Tumbles as Yuan Advances to 20-Year High


Job Fair
Photo:   Bloomberg

Treasury 10-year yields touched the highest level in more than 2 years as signs of a quickening economic recovery boosted speculation the Federal Reserve (FED) will keep reducing monthly debt purchases.  The benchmark yield rose above 3% for the first time in 3 months as investors weighed the FED decision last week to reinforce its commitment to low interest rates while starting to cut bond-buying in January.  The 10 year yield advanced 3 basis points to 3.02%, the highest since Jul 2011.  The yield has climbed 12 basis points since Dec 20 in its 6th straight weekly increase, the longest stretch in more than 6 months.  The 2 year note fell 2 basis points to 0.39%.  The security, which isn’t included in the FEDs monthly program of asset buying, headed for a 5th weekly decline, the longest since Sep.



Stocks did little on very low volume.  Many traders are away or not interesting in participating in the stock market.  That was to be expected because of the holiday period.  Trading on Mon & Tues will be primarily influenced by money managers adjusting portfolios to fit their needs.

Dow Jones Industrials

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