Monday, October 29, 2012

Monday Morning Musings

Well this is certainly an interesting morning in the markets.  Hurricane Sandy, or at least the anticipation of the storm, has shut down most of the exchanges for trading today and most likely tomorrow.  I heard the NYSE has not been shut down for weather for over 100 years.  Pretty surprising.

The bond market was open for trading this morning but will close at noon EST.  The options market is closed today as well.

Overnight action in Asia was mostly lower.  China was down -0.5% after reports suggested that there is little chance of an interest rate cut at this time.  Tonight the Bank of Japan will comment on a potential increase to its asset purchase program.

Europe's major markets are also lower this morning.  Bond yields in peripheral countries are rising.  Similar to comments we made last week, a Bank of England member tempered GDP expectations saying that the data may have been boosted by the Olympics.

In economic news in the US, personal income increased 0.4% (in-line) in September and personal spending rose more than expected to 0.8%.

The dollar is higher today, and commodities are down slightly.  I believe commodities futures markets are also closing early today.  Oil is lower to $85.90 and gold is down a bit today near $1708.

In bond trading today, bond prices are higher and pushing yields on the 10-year note down to 1.71%.

The VIX closed at 17.81 on Friday and is closed today due to the CBOE being closed for trading.

Trading comment: I would have normally been saying that I would be looking for some end of the month strength or maybe some window dressing to boost the markets ahead of month end.  But now I'm not even sure that we will see any trading before month end.  The markets could open again Wednesday, but I wonder if the uncertainty and the liquidity concerns from the 2-day closure will manifest itself in some pent-up selling pressure.  I think if that materializes I might still view it as a short-term buying opportunity heading into early November.


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