Daily Bulletin: July 8, 2016

  •  10-Year T-Note yields fell to a record low of 1.366% today, indicating an extreme demand for risk free assets. However, American stocks rose as well, with the Nasdaq Composite up 1.64%, its strongest performance in more than a week. One likely causative factor for this break in correlation is a global trend towards investment in American securities, be it stocks or risk free bonds.
  • Global uncertainties, especially with Brexit, and strong domestic American manufacturing and service sector activity caused a movement towards safer countries, especially the United States. Japan became a less attractive haven today as Japanese service sector sentiment weakened by 1.8 points to 41.2 for June, the worst reading since October 2014 according to Reuters.
  • The movement towards American securities today concentrated on basic materials (XLB) and industrials (XLI), with those sectors up 2.4% and 1.96% respectively. The outstanding performance of these sectors suggests that domestic manufacturing is strong and foreign investors want to take advantage of reliable dividends.

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