September 16 – September 20 Week in Review

Although last week was rife with noteworthy developments the stock market’s reaction was rather muted. For the week the S&P 500 shed 0.5%, the Dow Jones Industrial Average fell 1.1%, and the Russell 2000 dropped 1.3%.

Crude oil was in focus at the beginning of the week, after two refineries in Saudi Arabia were attacked on Saturday. Initial reports suggested that the attack impacted roughly 5% of total global oil output, however Saudi Arabia was able to restore a portion of the lost production quicker than expected. Crude oil surged more than 15% at the open Sunday, partly due to a concern that a response to the attack could spark a regional conflict. Those fears receded as the week went on.

Video 09.23.2019

On Tuesday attention shifted to the overnight funding market after the repurchase rate jumped for the second consecutive day, indicating liquidity stress among primary government bond dealers. The situation prompted the New York Fed to conduct repurchase operations on Tuesday, Wednesday, Thursday, and Friday.

On Wednesday the Fed announced their decision on interest rates, calling for a 25 basis point fed funds rate range cut while interest on excess reserves was lowered by 30 basis points to 1.80% in an attempt to encourage more lending in the overnight market. The FOMC voted 7-3 in favor of Wednesday's decision, with St. Louis Fed President, James Bullard, voting for a 50 basis point cut. Boston Fed President, Eric Rosengren, and Kansas City Fed President, Esther George, voted in favor of keeping the fed funds rate range unchanged. The Fed's dot plot showed that seven out of 17 Fed officials expect that another rate cut will be made in 2019, but the median projection does not point to any more rate cuts in 2019 or 2020.

Interest rates fell last week as investors sought safer ground. The 2 year note yield fell to 1.68%, ending the week down 11 basis points. The 10 year Treasury note yield fell to 1.72%, a weeklong decline of 18 basis points.

There was some slight movement on the trade front at the end of the week, as the Trump administration granted temporary tariff exemptions for some products imported from China. The decision was made after trade officials from the two countries conducted low-level talks ahead of the next round of negotiations planned for October. Unfortunately the positive vibes were short-lived as Reuters reported on Friday afternoon that the Chinese trade delegation cancelled its plan for a visit to farms in Montana.

In other markets the U.S. dollar index closed at 98.46, a small gain for the week. Crude closed at $58.09 on Friday, a gain of over $4 from last week’s close, after the attack in Saudi Arabia.

September 23 – September 27 Economic Calendar

  • Monday
  • Chicago Fed National Activity Index
    8:30 AM ET
  • PMI Composite FLASH
    9:45 AM ET 
  • Tuesday
  • Redbook
    8:55 AM ET
  • Case-Shiller HPI
    9:00 AM ET
  • FHFA House Price Index
    9:00 AM ET
  • Consumer Confidence
    10:00 AM ET
  • Richmond Fed Manufacturing Index
    10:00 AM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • New Home Sales
    10:00 AM ET
  • State Street Investor Confidence Index
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Survey of Business Uncertainty
    11:00 AM ET
  • Thursday
  • GDP
    8:30 AM ET
  • International Trade in Goods
    8:30 AM ET
  • Jobless Claims
    8:30 AM ET
  • Corporate Profits
    8:30 AM ET
  • Retail Inventories [Advance]
    8:30 AM ET
  • Wholesale Inventories [Advance]
    8:30 AM ET
  • Pending Home Sales Index
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Kansas City Fed Manufacturing Index
    11 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
    • Friday
    • Baker-Hughes Rig Count
      1:00 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This commentary is a matter of opinion and is for informational purposes only. It is not intended as investment advice and does not address or account for individual investor circumstances. Investment decisions should always be made based on the client's specific financial needs, goals and objectives, time horizon and risk tolerance. The statements contained herein are based solely upon the opinions of Telemus Capital, LLC. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.

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