Dow futures are up about 50 points in pre-opening trading after Wednesday’s modest sell-off. Stocks cannot sustain momentum in either direction and probably won’t be able to until we start seeing what Congress can or cannot get done in the toxic D.C. atmosphere.
Bond prices are lower after bonds rallied for no real reason Wednesday. Bullish bond traders are poised to move yields down a level and remain convinced that is the direction for yields — they just need a trigger to give them a push. Some traders are hoping that trigger will come tomorrow from either Fed chair Janet Yellen or Eurpoean Central bank president Mario Draghi in their speeches during the annual Jackson Hole symposium.
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Paul Ryan and others say the debt ceiling bill will pass, despite Trump’s threats, and the government will not shut down. It’s hard to believe Trump would shut down the U.S. government over funding of a wall that Mexico was supposed to pay for in the first place, but Trump is so unpredictable, it’s not unthinkable. This threat might come back to haunt the markets closer to crunch time.
Dwight Johnston is the chief economist of the California and Nevada Credit Union Leagues and president of Dwight Johnston Economics. He is the author of a popular commentary site and is a frequent speaker at credit union board planning sessions and industry conferences.