Mel's Blog

A Total Solar Eclipse of the Sun! Will the Market Eclipse Also?

August 21st, 2017 1:41 PM by Mel Samick

On Monday, August 21, 2017, all of North America will be treated to an eclipse of the sun. Anyone within view will be able to witness of nature’s most awe inspiring sights - a total solar eclipse. The eclipse will stretch from Salem, Oregon to Charleston, South Carolina. Observers outside this path will still see a partial solar eclipse where the moon covers part of the sun's disk. For those of you that won’t be able to see the sun disappear, you can see it disappear another time….it’s called night time.

Stocks pulled back last week after the latest political turmoil in Washington eclipsed President Trump's pro-business agenda. Stocks started the week off strong last week on waning tensions with North Korea, as equity gains corresponded with a sell-off in assets known as safe havens, such as U.S. Treasury bonds. However, during the week, investors’ sentiments took a toll, especially after the President disbanded two CEO advisory councils following the resignations of several members over his politically incorrect response to the recent violence in Charlottesville, Virginia.

By the end of last week, all major indices ended in the red due to Washington turmoil. The S&P closed at 2,426 while the Dow ended the trading week at 21,675. In major economic indicators released last week, Retail Sales in July rebounded 0.6 percent, which exceeded expectations but also included sizable upward revisions. The housing market continued to show its strength and reflected the confidence among the nation's home builders with a gain of 4 points in August. The minutes from the July FOMC meeting suggest that the Fed remains on track to announce balance sheet normalization plans at its September meeting. The message in the minutes on inflation was mixed. Consumer Sentiment unexpectedly burst higher in the preliminary estimate for August but the results, warns the report, do not fully reflect the impact of the weekend's violence in Virginia.

Turning to the bond markets, U.S. Treasuries were mostly flat for the week. Yields inched up early in the week on hawkish statements by New York Federal Reserve President William Dudley. At the end of the week, the Ten-year treasury yield was down nearly 1 bp and ended at 2.19 percent. Towing the same line, conforming mortgages rates also loosened a bit. At the end of the week, the Conforming Fixed 30-year rate leveled out at around 3.67 percent, while the Conforming Fixed 15-year rate finished at around 2.99 percent.

Major U.S. economic indicators to be released this week will be the FHFA House Price Index on Tuesday, Existing Home Sales on Wednesday and New Home Sales on Thursday.

Mel
Information provided by NYCB Capital Markets

Posted in:General
Posted by Mel Samick on August 21st, 2017 1:41 PM

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