|Bid||0.00 x 4000|
|Ask||0.00 x 3200|
|Day's Range||120.22 - 120.75|
|52 Week Range||116.09 - 129.57|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.15%|
President Trump’s imposition of tariffs on China (MCHI) and key allies has rattled the markets (DIA) across the globe. China is the largest holder of US Treasuries (TLT). In March and April, several foreign governments reduced their US debt holdings—including T-bills—by $47.6 billion.
If you knew with 100% certainty that an economic recession was coming, would you alter your long-term asset allocation? Unfortunately, the behavioral biases ingrained in our DNA often lead us to make poor investment decisions in times of stress. One of the most common errors is the mistaken belief that market timing "works".
After starting this week on a mixed note by closing slightly lower on Monday, the US Dollar Index regained strength and gained on Tuesday and Wednesday. Carrying forward the strength, the US Dollar Index opened stronger on Thursday and was trading with strength at 11-month high price levels in the early hours.
After a brief pullback on Monday, the US Dollar Index regained strength and rose to 11-month high price levels on Tuesday. Maintaining the strength, the US Dollar Index opened stronger on June 20 and was trading with strength at elevated levels in the early hours.
The US bond market had a limited reaction to the Fed’s 25-basis-point rate hike and the 0.20% increase in interest paid on excess reserves. The spread between the US two-year and ten-year bonds narrowed to 36 basis points, which led to a further flattening of the yield curve in the previous week. The Vanguard Total Bond Market ETF (BND), which tracks the performance of the bond markets, rose 0.06% for the week ended June 15 and closed at 78.92.
One of the curious attributes of the U.S. stock market in 2018 is that while there are growing concerns over the outlook for growth going forward, sectors traditionally seen as safe have struggled the most, while the ones more closely correlated to macroeconomic conditions have generally risen.
Stock and bond ETFs slipped on Wednesday as the Federal Reserve announced another moderate rate hike and stated its intent to raise rates two more times later this year. Following the Fed's announcement mid-Wednesday to raise interest rates 25 basis points, effectively raising the federal funds rate from 1.75% to 2%, the iShares 7-10 Year Treasury Bond ETF (IEF) dipped 0.2% and the iShares 20+ Year Treasury Bond ETF (TLT) fell 0.3%, which wasn't a surprise as older debt with lower yields become less attractive in a higher rate environment. The Invesco DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) , which tracks dollar movements against a basket of developed currencies, strengthened 0.2% in response to the tightening monetary policy.
After a brief pullback last week, the US Dollar Index closed higher on Monday and started this week on a stronger note. Maintaining the strength, the US Dollar Index opened higher on Tuesday and lost strength as the day progressed.
The US bond market seems to be benefiting from multiple crises around the world. First, there was the crisis in emerging markets, which could further escalate if the US dollar continues to appreciate, and then there are uncertainties about Italian debt, the G7 meeting, and the upcoming central bank meetings this week. The Vanguard Total Bond Market (BND) ETF, which tracks the performance of the bond markets, was down by 0.28% for the week ending June 8 and closed at 78.9.
A slide in emerging market stocks led by Brazil apparently is giving a lift to the Treasury market Thursday. The iShares MSCI Brazil exchange-traded fund (EWZ) has been slammed for over 5% late in the session on the double whammy of sharp drops in the Bovespa and the real. The drop helped drag down the iShares MSCI Emerging Markets (EEM) by 1.4%.
The US Dollar Index started this week on a weaker note and declined in the first three trading days of the week. Maintaining the weakness, the US Dollar Index started Thursday on a weaker note. The US Dollar Index was trading with weakness at three-week low price levels in the early hours.
After closing the last week unchanged, the US Dollar Index started this week on a weaker note and declined in the first two trading days. Carrying forward the weakness, the US Dollar Index opened Wednesday on a weaker note. The US Dollar Index was trading with weakness at two-week low price levels in the early hours.
A host of Trump’s anti-trade policies has been playing foul in the stock market, leading to increased market uncertainty and trade tensions between the United States and countries around the world. After both the United States and China reached an agreement and vowed not to launch a trade war against each other, Trump’s announcement to impose a hefty 25% tariff on $50 billion worth of Chinese goods escalated tensions between the two. Trump also plans to restrict Chinese investment in U.S. companies and limit the number of goods that these can sell to China.
Last week, the US Dollar Index closed flat and broke the two-week gaining streak. The strong rebound on Friday helped the US Dollar Index close the week without losses. However, the US Dollar Index opened Monday on a mixed note and was trading with weakness at ten-day low price levels in the early hours.
The US bond market was volatile in May. The ten-year yield reached a peak of 3.1% and fell to a low of 2.8% in a span of three weeks. The wild swings in the bond markets were a result of multiple factors including the dovish FOMC statement, weaker-than-expected inflation report, and a rebound in trade and geopolitical tensions. Last week, bond markets’ limited reaction to the stellar jobs report was a surprise. Although a strong jobs report increases the odds of a rate hike, the developments surrounding trade wars and domestic political uncertainties kept bond yields under pressure.
In Friday's Daily Market Commentary webinar, I got a lot of questions about whether rising interest rates, spurred by the stellar employment report, will hurt stock prices. A bond's price is an inverse function of its total yield, which is what finance nerds say when they mean if yields (or interest rates) are rising, bond prices are falling. Further, interest rates tend to have an imperfect, but positive correlation with stocks.
Three weeks ago that Jamie Dimon said bond yields were headed to 4%? The political crisis in Italy was of course, the proximate cause of the big move on Tuesday, but to blame this rally just on risk-off would be a mistake. Just as the calls for a 4% yield on the 10-year note represented surface-level analysis, the view that rates should just revert back to 3.1% now that Italy has a government is also surface-level.
The US Dollar Index surged to six-month high price levels on Tuesday. However, the index pulled back in the next two trading days amid the weak market sentiment. The US Dollar Index opened slightly higher on Friday and was trading with mixed sentiment in the early hours.
After gaining in the first two trading days this week, the US Dollar Index declined on Wednesday. Carrying forward the weakness, the US Dollar Index opened on a weaker note on May 31. The US Dollar Index was trading with weakness at one-week low price levels in the early hours.
It's also significant when, at the same time, it takes out that Ichimoku cloud, the technical indicator that compares the highs and lows of the last 9-days with the highs and lows of the last 26-days. The sudden, big move downward is said to be related to the weakness in the Euro. The weakness in the Euro is said to affected by the possibility of a change in government in Italy -- which is said to open the possibility of that nation's lessening of engagement with the Euro.
The US Dollar Index started this week on a stable note and surged to the highest levels traded since November 7, 2017, on Tuesday. On May 30, the US Dollar Index opened the day on a mixed note. The US Dollar Index was trading below opening prices in the early hours.