Wednesday August 31

Stocks fell today finishing the month with a 0.1% decline. The S&P 500 fell 0.2% today to 2,170 and the Dow Jones fell 0.3% to 18,400. Economic data today showed that the ADP Employment Report came in slightly higher than expected, and the prior month was revised higher by 15,000 jobs. This is indicative of a healthy US labor market, which will be more definitive once the August non-farm payrolls report is released on Friday. These numbers are crucial for the market since if reports continue to meet the Fed’s expectations then that is conducive to another Fed rate hike. Accordingly rates rise slightly today. The 10 year yield rose 1bp to 1.58% and the 2 year rose 1bp to 0.81%. Oil prices today sold off after data showed that crude inventories rose by far more than expected (2.3mm actual vs expectation 825k). As a result Brent fell 2.8% to $47.04 and WTI fell 3.5% to $44.75. The US dollar fell 0.1% against EUR to $1.1153 even as inflation data in the Eurozone showed that core inflation fell. Also counterintuitively the 10 year bund yield rose 3bp to -0.06%. USD rose 0.5% against JPY to Y103.45. GBP rose 0.4% against EUR to $1.3129. This past month utilities were the worst performing sector in the S&P 500 (-6.1%) and financials were the biggest outperformer (+3.6%) which is indicative of how FOMC expectations shifted.

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Wednesday August 31

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