Stocks rebounded from Friday’s selloff. The reasons for the increased volatility includes the rising prospects for a September rate hike, the North Korean nuc test and election related issues. These issues could well continue to inject volatility into markets for the foreseeable future and end the recent calm market action we saw this summer.
The Dow opened the day lower but then moved higher and closed the day up 239 points to 18,325 on lower volume. Both the NASDAQ and the S&P 500 posted solid gains on lower trading volume. The low volume could signal that big investors are not jumping back in with conviction at this point.
The odds for a Fed rate hike in September has grown to 79% probability according to the CME Group. CME says that the target range for a rate bump is 0.5% - 0.75%. The rate decision will be announced on September 22nd but until then the so called “quiet period” will be in effect meaning that the members of the Federal Reserve board will not be able to make any public comments other than the occasional belch after a good meal.
People often ask me if the markets are forecasting any results for the upcoming Presidential election. While so far I have not seen anything that indicates one candidate over another Bloomberg did have an article about how the Mexican peso has been gaining strength when Hillary does well and falling back when “The Donald” does well. The peso is the second most liquid emerging market currency in the world behind the Chinese Yuan and with comments about walls and trade deals in election speeches it could become the defacto indicator of who might win.