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Morning Commentary

Giving Up The Ghost

By Charles Payne, CEO & Principal Analyst
9/6/2017 9:45 AM
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It’s been a sea of red as the nation grapples with many issues for which there don’t appear to be any easy answers. Congress signals it’s on the verge of not delivering aid to Houston. Such aid, coupled with an automatic increase, will undoubtedly increase the debt ceiling. I like the idea of a debt ceiling, but it’s become a farce after being hiked a dozen times.

In this saga, the ghost in the machine appears at the last minute to save the day, which resumes minute by minute in hiking the debt ceiling, while the government turns its back on the spending spigots with both sides of the aisle declaring a victory.  With potentially $200 billion in damages, Hurricane Harvey means more debt for the federal government. 

Meanwhile, much is being made about the 10-year yield hitting 2.07, the lowest since President Trump’s election. There is no doubt that investors are seeking protection, but there was another message from the bond market yesterday.

The yield on the one-month bill spiked to 1.30% from 0.96%.  There are some clear signs from investors that think the United States Congress will not hike the debt ceiling, pass a continuing resolution, or even send aid to desperate folks in a timely manner.  At this point, it’s hard to give Congress the benefit of the doubt.

President Trump met with Republican leaders in charge of making this happen. Despite his brief on-camera comments and the photo op, along with the body language from Kevin Brady, Mitch McConnell, and Paul Ryan, it wasn’t encouraging.  Today, President Trump will make a case with key Democratic leaders.

Daily Treasury Yield Curve Rates

Date                      1 Mo      3 Mo      6 Mo      1 Yr         2 Yr         3 Yr         5 Yr         7 Yr         10 Yr      20 Yr      30 Yr

09/01/17              0.96        1.02        1.10        1.24        1.35        1.46        1.73        1.99        2.16        2.51        2.77

09/05/17              1.30        1.03        1.13        1.23        1.30        1.40        1.65        1.90        2.07        2.43        2.69

Confidence Rising

Yet another read on confidence shows that the momentum is returning. The Gallup’s Monthly Economic Confidence Index edged higher to its highest level since March. The index is based on two questions:

I should note this index came on like a galloping stallion after the election hit a record +11 in January. The Gallup began this index in 2008; prior to the Trump election victory, it had only edged into positive territory twice: January and February of 2015.

35% Excellent

21% Poor

14% Current Conditions

The +145 current conditions read is a record for the series, underscoring other surveys that show Americans are feeling great about where they are now, but losing faith about what’s in store over the next six months.

Today's Session

It's critical the market puts the brakes on yesterday’s slide and picked up on last minute buying that helped the major indices hold above their respective 50-day moving averages.   With Hurricane Irma barreling toward mainland USA, there will be even more tension, but America has shown its best self in the face of Hurricane Harvey.  We will do it again if necessary.

 


 

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