Oil, Not Greece, Forces U.S. Stocks and Bond Yields to Stumble

Greece learned what happens today when a hungry group of sellers suddenly get a chance to plunge for the exits at once. Its markets re-opened this morning to a near-instantaneous crash of 23%, ultimately closing at a milder 16% lower. Whoever bid that market higher during intraday trading is either really brave, or really stupid!

Funny enough, this didn’t seem to have much impact on U.S. stocks.

The falling price of oil, however, sure did!

West Texas Intermediate crude actually fell below $45 in a 4% slide, and was hovering just above the $45 mark this afternoon. Even Brent slid below $50!

This is getting dangerously close to $42 – what Harry considers the point of no return for the price of oil and the fracking industry!

At least we get a little bit of excitement after a relatively boring week in which the Fed, yet again, left its policy unchanged.

No surprise, as usual. Stocks and bonds barely budged last week as the Fed brought nothing new to the table. Yields on the 30-year U.S. Treasury bond moved between just over 3.0% and about 2.9%. But today, they’re down to 2.85%. And yields on the 10-year bond hit a two-month low at about 2.15%.

Meanwhile, the Dow Jones Industrial Average fell 1% along the slump in energy prices.

At this point, more analysts think the Fed won’t raise rates in September than those that do, so any economic data that could change that could stir volatility in stocks and bonds.

Be on the lookout for Friday’s jobs report, particularly any changes in wage growth. And ahead of that, any news regarding personal income. These are crucial to the Fed’s decision to raise rates or not.

With the clock ticking fast on 2015, and the Fed backed into a corner, I expect bond traders like those who subscribe to Dent Digest Trader will have plenty of opportunities to profit from swings in the interest rate market.

Lance Gaitan

Lance Gaitan
Editor, Dent Digest Trader

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Categories: Commodities

About Author

Lance Gaitan graduated from Franklin University in Columbus, OH with a degree in Finance. After graduating and working as an auditor for an insurance administrator as a number of years, he attained his securities license. He then went to work as a broker for a small firm and during the mid-1990’s Lance managed the futures trading desk for Piper Jaffray, a large regional brokerage firm based in Minneapolis. After migrating to Florida in early 2000, Lance founded a futures trading firm, GSV Futures, specializing in retail commodity trading strategies. Lance sold that business in 2006 and joined Harry Dent, Jr. and Rodney Johnson at Dent Research shortly thereafter.