Dollar Weakens as Bond Yields Continue to Fall

Markets were mixed in average volume trading today. The Dow fell slightly, dropping 12.69 points to close the day at 16,272.01. The S&P 500 performed best in terms of real gains. It gained 0.20%, or a scant 3.79 points, to close at 1,923.82. The NASDAQ split the difference, gaining 6.91 points to close out the trading day at 4,627.08.

In overseas trading, markets were similarly mixed. In Asia, both Japan’s Nikkei and Hong Kong’s Hang Seng index ended the day up. The Nikkei gained 341 points, and the Hang Seng was up 289. In Europe, Germany’s DAX was down 149 points. France’s CAC closed down 30 points.
London’s FTSE had a better day, gaining 11 points to close at 6,072.47.

Bond Yields Continue to Fall

In what has been a slowly mounting crisis, the yield of Treasury notes has been on the downswing. The yield of 10-year Treasury notes has declined by nearly 0.30% over the course of the past 30 days. This signifies a steady weakening of the US dollar, which could have global consequences. The US and the rest of the world are counting on a strong dollar in order to provide a safe investment for overseas and domestic traders who are searching for stability in the often-tumultuous world markets.

Part of the reason for the fall in the value of the dollar is uncertainty over the Fed’s next move. Analysts generally agree that the Fed missed its best chance to raise interest rates earlier this year. As of right now, statements from the Fed indicate that they probably won’t act until foreign and domestic markets are on steadier footing, but paradoxically their failure to act is leading to further instability and falling value for the dollar.

Oil Holds Steady Despite Market Declines

The futures price of crude oil has held steady this past month, despite a falling stock market. The price of crude has remained relatively flat at $45 per barrel, even as US indices have fallen. This could be a good sign that the price of oil has found a support point that’s holding steady, rather than the freefall that oil was previously undergoing in previous months.

Chinese Markets Down 17% Over 6 Months

Hong Kong’s Hang Seng, which is China’s de facto marketplace, has plunged 17% over the past 6 months. When people talk about the implosion of Chinese markets, it’s generally this figure that they’re discussing. Of course, consumer demand has also fallen in China. Companies like Apple (AAPL), which have relied on steady demand for their products overseas, are currently paying the price. Although the Hang Seng has rallied slightly over the past few days, it’s still near 6-month lows.
Published on Oct 1, 2015
By Aaron Phillips
Aaron Phillips is a financial researcher and journalist based out of Michigan. He regularly writes the IG Daily and IG Weekly columns.

Copyrighted 2018. Content published with author's permission.

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