Monday, August 31, 2015

Economic Journal - Monday, 8/31/2015


(As of 7:10 am PST)

US stocks slumped Monday, with the three major benchmarks on pace to wrap up one of the worst trading months in years. Fears over China persisted throughout the weekend as rumors swirled about that China’s central bank would begin backing off its stock purchase program that has propped up Chinese stocks recently. China’s Shanghai composite index continued its volatile trading pattern Monday, finishing the day down 0.82%, wrapping up its worst monthly performance in three years by tumbling 12.5% in August. As has been the trend recently, the China trade kicked up the selling pressure in Europe early and has now led to a disappointing US open. Also, adding to the risk-off scenario for US investors today, is a lack of clarity around the Federal Reserve’s rate hike timeline. This weekend’s annual summit in Jackson Hole, put on by the Kansas City Federal Reserve Bank, produced little in the way of clarity or direction as to when the central bank is set to raise interest rates. While many market participants now lean towards a December rate hike, there is still thought that a September hike could be in the cards, especially after comments from Vice Chairman Stanley Fischer over the weekend seemed to indicate a tone that hinted toward the latter. Economic data is light today with a report on Chicago business PMI falling slightly in August. Oil prices are giving back some of last week’s gains while gold is down slightly today. Interest rates are down as equity selling is bidding up the price of treasuries.

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