Another week, another volatile session for both foreign and U.S. equities.
Friday morning saw the Dow Jones Industrial Average down over 300 points on a decent employment report. With Asia’s stock market tumbling, Europe suggesting further stimulus, and the U.S. concerned about increasing interest rates, and a slowing global economy, the question remains as to whether the Federal Reserve will lift short interest rates from zero in September.
Both the U.S. bond and equity markets remain highly volatile. Bonds have only benefited marginally from all of this volatility with the U.S. 10-Year Treasury trading around 2.13%.
With the bond market unable to post any meaningful gains (yields move inverse to price) in the face of extreme global stock market losses, our inclination is to recommend locking in rates at these price levels.