Weekly Market Commentary 9-4-2017

Another Hurricane could be on the way.  Hurricane Irma strengthened to a category 5 and looks to be headed toward southern Florida.  It is expected to hit Florida this weekend sometime Saturday night or Sunday morning.  Florida Governor Rick Scott has already declared a state of emergency.1

The word ‘Bondageddon’ is back in the news again.  The fear is that if the Federal Reserve continues to raise rates that people will panic and flee the bond market.  Personally I think they are being a bit dramatic but rising rates is something bond owners should keep an eye on.2

Another thing to keep an eye on is the debt ceiling.  Congress needs to pass a bill by the end of the month to fund the government to avoid a shutdown.  Also they have to raise the debt ceiling.  Shouldn’t be a big worry until you think about how congress has been doing business lately…meaning they can’t agree on anything.  A shutdown wouldn’t be the worst thing in the world, they aren’t that uncommon, and the markets usually rebound after.  But the debt ceiling could be a bigger problem.  It could take a lot of confidence out of the market.  It could also mean the US could lose its status and the world’s “safest” place where investors can be confident their debt will be repaid.  Illinois would be a good example of what happens if that happens.3

The markets ended the summer on a high note.  All three benchmarks had gains last week.  The S&P 500 was up 1.37%, The DOW was up .80%, and the Nasdaq Composite added 2.71%.  The VIX dropped 10.02% meaning that there is more confidence or less fear in the market.4

% CHANGE Y-T-D 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +11.26 +19.37 +13.59 +6.46
NASDAQ +19.55 +23.11 +21.97 +14.79
S&P 500 +10.62 +14.08 +15.21 +6.80
REAL YIELD 9/1 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.37% 0.12% -0.68% 2.34%

Sources: wsj.com, bigcharts.com, treasury.gov – 9/1/17

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

For more on the economy read our Weekly Economic Update.  If you need help with your investments in you r 401k, check out our 401k participant website.  And if you haven’t already sign up for our free personal financial website.  Keep track of everything in one place.

Citations.

  1. https://www.yahoo.com/gma/hurricane-irma-strengthens-closes-caribbean-123104939–abc-news-topstories.html
  2. http://www.businessinsider.com/bondageddon-could-be-back-heres-how-to-protect-your-portfolio-against-it-2017-8
  3. http://www.businessinsider.com/debt-ceiling-government-shutdown-market-reaction-2017-9?utm_content=bufferb3ef1&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer-bi     
  4. https://paullewis.com/weekly-economic-update-942017/ 
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