Let’s forget everything and let’s just worry about a storm, that’s pretty much summed up Friday’s trading. With Friday’s traffic, out of Florida backed up to Atlanta many folks took the hard option and stayed put whilst others tried the flight option all to no avail. What got the markets chatting the most on Friday was how big a hit catastrophe bonds would take and just what was covered by flood insurance. It seems the experts were none the wiser as well.
What was missed on Friday, however, was the change in the Bill to fund the U.S. It seems as though there is a clause there that may well let the U.S. rapidly descend into a plutocracy. It seems as though religious groups and corporations can now fund as often as they like as much as they like and distort things anyway they like without fear or retribution or loss of tax exempt status. Should the Bill get up then any number of think tanks, advertising groups, and churches will become powerful lobby groups without many folks knowing actually what is behind the agenda or the motives. The GOP have used these tactics in the past to very great effect.
For the markets though, the fear factor is the primary driver and looks likely to be the norm for a little while yet. There are a couple of hurricanes being spawned in the same area that Irma was created so storms will form part of the agenda and so too concerns about Korea and maybe just a concern or two about Russia’s war game.
In response gold has rallied, the yen has rallied and treasuries have rallied. See the graphs below.
Fear prevails and that is what is driving market sentiment. For both Lil Kimmie and Putin, the West’s anxieties must be giving them a real incentive to raise the ante. Both have succeeded in scaring the West, driving and influencing sentiment. No doubt they both have an end game which the West has yet to discover but one thing is for sure with a weak and gullible President in the U.S. these two leaders are having a field day at the U.S.’s expense.
William Dudley and Esther George Lid out their views on Friday about a possible rate hike. Both reiterated the need to raise rates but remained concerned over low inflation.
Equities fell on the day. The S&P fell 0.15% and the Dow was up marginally at 0.06%.
Currencies were mixed with the Dollar Spot Index falling 0.2%, and the yen advanced 0.7%.
Bonds were steady with the 10-year closing around 2.05% a level similar to Thursday’s close.
Commodities were mixed on geopolitical risks and falling manufacturing demand for the moment out of China. Copper fell 3.3%. WTI fell 3.1%.
Aussie Market Today.
The Aussie Market will probably open a bit sluggish. Offshore the market was directionless. Geopolitical risks will drive the markets for a while yet. I expect bonds may drift a little weaker on the day.