Market Action

• A better than expected jobs report released on Friday provided some good news for markets. All major equity markets in the U.S. were down on the week.
• European markets also declined this past week. Scant information from Mario Draghi on an asset purchase program left market participants disheartened. Some outlets speculate that the ECB leader is in a debate with other European leaders about what assets would qualify for the program. Mr. Draghi is believed to be advocating a more aggressive program than others would like, including purchasing tranches of Greek and Cypriot bonds.
• Protests in Hong Kong have grown and captured the attention of Asian onlookers. China’s designated leader in Hong Kong has authorized negotiations with the leaders of the protest movement. Elsewhere in Asia doubt is growing in Japan over the government’s efforts to hit growth and inflation targets.
• The dollar continues to be one of the major headlines in markets. New periodic highs against both the Euro and Yen were set this week. The greenback’s rise also erased all of the gains gold has made this year. Some analysts are concerned the strength of the U.S. currency will weigh on Q3 earnings of large cap firms.
• The dollar has also continued to push the price of oil down in global markets. U.S. WTI closed below $90 on Friday and Brent crude also fell on the week. Other factors pushing oil down include large increases in reported output from Libya as well as reports that Saudi Arabia cut its price on its Asian benchmark.
• The Federal Reserve’s cap on its Reverse Repo Facility did not hold up this week. Limited to $300 billion per day normally, market demand surged to over $400 billion as institutions attempt to dress their books with the end of the quarter. The demand helped push yield negative on short-term debt.
• High yield bond funds continue to see outflows. The falling demand for these risky assets has several analysts expecting more downward moves in the markets in the short-term future.

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