GBR Market Wrap: Bond Market Madness

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In this Week’s Issue: Aug. 12, 2011

Weekly Snapshot

• U.S. retail sales for July posted their biggest gain since March (Reuters)
• U.S. consumer sentiment at 30-year low of 54.9, worse than forecast of 63.0 (FT)
• Industrial production for June 2011 was down by 0.7% in Euro area (Eurostat)
• U.S. international trade deficit in June 2011 increased 4.4% to $53.1 billion (ESA)
• CME hiked margin requirements for gold futures by 22% from $6,075 to $7,425 (Bloomberg)
• Spot Gold hit a new all-time record high of $1814 on Thursday (Reuters)
• Apple valued at $337bn, beating Exxon’s $331bn for highest market cap (AP)
• U.S. Treasury sold $24bn in 10-year T-notes at a yield of 2.14%, lowest rate on record (AP)
• China’s trade surplus shot up to $31.5bn in July, the biggest in more than 2 years (FT)
• The Chinese Yuan rose to a new record of 6.4170 to the Dollar vs. 6.4404 (WSJ)
• China inflation rose 6.5% in July, beating forecasts and hitting highest level in 3 years (Bloomberg)
• Fed committed to keeping interest rates at exceptionally low levels through at least mid-2013 (FOMC)

Market Barometers


Weekly Chart

They say the grass is always greener at the other side. Then again, looking at some of the images of U.K. riots, U.S. investors have been in a relatively comfortable position merely enduring market gyrations.  After looking at this fascinating chart below, I already felt so much better about the grass in our own economic backyard.  It’s looking so much greener now…

Recommended Read

After last week’s ratings downgrade of U.S. Treasury debt, one could have expected a melt-down in the bond market. Instead, the gyrations occurred in equities while Treasuries saw a rally sending yields on the 10-year T-note as low as 2.1%. The Bond market response was not just giving us a sort of “who cares message” but rather “forget about ratings agencies altogether.”  To explain how this could play out we need to look at the example of Japan which has “been there and done that” according to Peter Tasker.  Please consider How to make monkeys out of rating agencies.

Recommended Video

Has the U.S. Lost its Mojo? Find out in the video below.

Good luck and good investing!


Clemens Kownatzki, MBA is an adjunct professor of financial risk management at the Graziadio School of Business and Management, as well as the founder and CEO of FX Investment Strategies, a Registered Investment Advisor. In addition to running his investment advisory firm, he is a contributing author at SeekingAlpha.com and BusinessInsider.com. He also authored the book, Money Music 101, available on Amazon and Kindle, in addition to publishing the popular investment blog www.fxinvestmentstrategies.com along with a weekly newsletter.Disclaimer

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Author of the article
Clemens Kownatzki, MBA
Clemens Kownatzki, MBA
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