Japanese and other major Asian markets were closed today for Respect for the Aged Day. Hong Kong's Hang Seng Index
(INDEXHANGSENG:HSI) closed up 1.47% and other emerging markets closed in positive territory.
Much of the news flow centered around the letter from former Treasury Secretary Larry Summers in which he withdrew his candidacy for the Fed chairman. Summers was viewed as more hawkish than the other leading candidates Janet Yellen and Donald Kohn. This led to anxiety among many fixed income investors over his potential deviation from current Fed policy. Summers cited the potentially acrimonious confirmation process in the Senate that would be damaging to the integrity of the Federal Reserve, President Obama, and the American people.
The market's response to the news included a rally in gold, Treasuries, and equities, and a sell-off in crude oil. The Treasury curve steepened significantly, indicating that interest rates will likely remain near zero for a longer period of time. Gold staged a number of short-lived rallies throughout the day, but eventually finished near unchanged.
Equities opened up more than 1%, but failed to hold onto those gains as the day progressed. Apple
(NASDAQ:AAPL) fell almost 4% in the day's trading, dragging the Nasdaq-100
(INDEXNASDAQ:NDX) down 0.34%. Other tech laggards included Facebook
(NASDAQ:ALTR), and Vertex Pharmaceuticals
(NYSE:JPM) announced that it would agree to at least $750 million in fines associated with its London Whale credit derivative trades.
Tomorrow's Financial Outlook
Economic data set to be released tomorrow morning includes August's consumer price index, July foreign Treasury flows, and the NAHB's September builder sentiment. August consumer prices are estimated to have risen 1.6% from a year ago. "Core" prices, ex-food and energy costs, are estimated to have risen 1.8%. Last week, producer wholesale prices rose 1.4% from a year ago, down from a 2.1% rate the month prior.
The NAHB's survey is expected to remain at an index reading of 59, unchanged from the month prior. New home sales contracted 13.9% to a 394K annual rate last month.
The UK is scheduled to release its producer and consumer price indexes overnight. Economists expect that UK consumer prices rose 2.7% from a year ago and producer prices rose 1.8%.
The only earnings report on the calendar tomorrow is from Adobe
No positions in stocks mentioned.
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