Investment Commentary –July 26th, 2017

Market Indices as of Market Close July, 26th, 2017
Dow 21,630 (9.37% YTD)
S&P 2,478 (10.64% YTD)
NASDAQ 5,947 (19.12% YTD)
Gold $1,253 (7.04%)
OIL $48.38 (-18.37%)
US 10Y Treasury 2.323 (-18.43%)
Barclay Bond Aggregate (2.45% YTD)

Fed expected to leave rates unchanged; balance sheet in focus

WASHINGTON (Reuters) – The Federal Reserve is expected to hold interest rates unchanged on Wednesday and possibly hint that it will start winding down its massive holdings of bonds as soon as September in what would be a vote of confidence in the U.S. economy.

The U.S. central bank will issue its latest rates decision following the end of a two-day policy meeting at 2 p.m. EDT. Economists expect the Fed’s benchmark lending rate to remain in a target range of 1.00 percent to 1.25 percent.

That would mark another pause in the monetary tightening campaign that the Fed began in December 2015. The central bank has raised rates twice this year, including at its last policy meeting in June.

Wall Street analysts see little chance the Fed will announce the start of the wind down of its $4.5 trillion balance sheet. However, the Fed’s policy statement may provide more visibility on when that might occur.

Oil prices rise as falling U.S. inventories stoke rebalancing hopes

LONDON (Reuters) – Oil prices rose to near eight-week highs on Wednesday, as a fall in U.S. inventories bolstered expectations that the long-oversupplied market was moving toward balance.
Brent crude futures LCOc1 rose 40 cents to $50.60 a barrel by 1213 GMT, after rallying more than 3 percent on Tuesday.

U.S. West Texas Intermediate futures CLc1 climbed 50 cents to $48.39 a barrel.

U.S. crude stockpiles fell sharply last week as refineries boosted output, while gasoline inventories increased and distillate stocks decreased, the industry group the American Petroleum Institute said on Tuesday.

Crude inventories fell 10.2 million barrels in the week ending July 21 to 487 million, more than the expected decrease of 2.6 million barrels. Data from the U.S. Energy Information Administration on Wednesday could provide more support, with forecasts of a drop for a fourth week in a row.

Headlines around the Web:

Euro policy

The European Central Bank on Thursday kept its interest-rate policy and its bond-buying program unchanged. The bank’s president, Mario Draghi, said that recent positive momentum in European economic growth hasn’t yet translated into inflation.

Yield squeeze

U.S. government bond yields fell for the second week in a row, with the yield of the 10-year U.S. Treasury bond slipping to 2.23%. As recently as July 7, the yield was 2.39%.

On Tap for the rest of the week:
Wednesday: U.S. Federal Reserve Board concludes two-day policy meeting
Thursday: Durable goods orders, U.S. Census Bureau
Friday: Second-quarter GDP,


This past week’s leaders included Conglomerates, Financial and Basic Materials. . Laggards included Industrial goods.


On July 26, 1908, the Federal Bureau of Investigation (FBI) was born when U.S. Attorney General Charles Bonaparte ordered a group of newly hired federal investigators to report to Chief Examiner Stanley W. Finch of the Department of Justice. One year later, the Office of the Chief Examiner was renamed the Bureau of Investigation, and in 1935 it became the Federal Bureau of Investigation.

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.