Will Interest Rates Rise?
By Jim Dondero | June 12, 2015
- Last week the US dollar continued to range trade with the Euro likely setting up its own range over the intermediate term. The Yen broke down for the week, failing at resistance. Commodities remained in downtrends and are still suggesting the possibility of deflation for the longer term. The exception being oil, which likely has a bottom in place and appears to be holding.
- Rising interest rates continue to be a possible problem for stocks, and it is still unclear whether rates will trend higher from here or fall into a trading range. The key canary may well be the 5-year US Treasury, which is now at resistance. The 30-year and 10-year US Treasuries found resistance at previous levels as high yield exhibited signs of weakness, failing at resistance.
- US equities once again remained ‘mixed.’ Leadership was relatively weak regarding the NYSE, which showed a negative number of net new highs; however, the 50-day moving average was held by both the NASDAQ and S&P 500. Five of the nine S&P sectors were up for the week with four finishing lower. Financials continue to lead along with technology, discretionary and health care.
- China could be exhibiting a long-term breakout overseas as India struggled to hold at resistance. The DAX held at 50% retracement and we believe that the DAX, HEDJ and Nikkei may still present opportunities on the pullbacks.