October 26, 2015

Equity indices are back into positive territory for the year as of last week, with the S&P 500 boasting a gain of 0.66% for 2015. Meanwhile, treasury trading has been correlated with stocks, as opposed to their typical relationship of trading inversely with each other, and the 10-year treasury has been fluctuating between 1.98% and 2.14% for the last few weeks. The longer-term range is still between 1.90% and 2.30%.

A week ago China released their GDP figures, reporting a growth rate of 6.9%, just short of their 7.0% target, but still better than estimates by 0.1%. Also this morning, the Peoples Bank of China reduced interest rates for the sixth time since November, and also relaxed their reserve requirement as they seek to continue to bolster the economy.

In the US, the Fed’s treasury holdings begin maturing in early 2016, and there is talk that the Fed could decide to let those holding mature without reinvestment, as an early form of tightening, before they actually decide to bring interest rates off the their floor. This Wednesday the Fed will announce their next rate decision, but no increase is expected to come this week.

In politics, the two main headlines from last week were the official announcement by Joe Biden that he will not run for president in 2016, and that Paul Ryan has officially announced that he seek the nomination for speaker of the house and replace John Boehner.

Eric Swanson, CFA