Commentary
Today’s comments will be very brief…
Equities (SPY, QQQ, IWM) were relatively flat, either declining no more than 50 bps or increasing no more than 6 bps. Volatility (VIX) was today’s winner for positive price performance.Bonds distinguished themselves from all other asset classes as the 20+ Year Treasury ETF (TLT) initiated a new long-term downtrend. Have we begun the great descent into the nether regions of bonds? Currencies (UUP, FXE, FXY) and Commodities (DBC, GLD, USO) also changed very little in terms of price performance. Real Estate (IYR, ITB), however, was down over 100 bps and appears to have succumbed to some profit taking after last week’s gains.
ETF Capital Markets Performance Summary
Market Moving Events
Bullish
Central Banks / BOE: As expected, the Bank of England made no changes to its monetary policy and will keep interest rates @ 0.5%. Quantitative Easing (QE) remains on track for STL-BP375bn in asset purchases.
Central Banks / PBOC: In addition to raising the deposit-rate ceiling to 150% of the benchmark rate, China has now cut interest rates 3 times over the last 6 months, this time shaving 25bps off the 1-year lending rate and deposit rate respectively to 5.10% and 2.25%. This action was taken in response to its view that the “economy faces relatively large downward pressure”.
Bearish
Employment / USA: The Labor Market Conditions Index contracted to -1.9% vs. consensus @ 3.1% and prior revisions @ -1.8%. Given the fact that labor conditions have now been in negative territory for the first time in 3 years and for 2 consecutive months, this should give the Fed Reserve even more justification to defer raising interest rates.
Sovereign Debt / Greece: Prior to today’s trading Eurozone finance ministers leaned towards skepticism when it comes to Greece being able to reach a deal that will enable it to meet its E750bn payment this Tuesday to the IMF.
