Sep 25, 2019

September's market reversal on stocks and Treasury bonds

Dion Rabouin, author of Markets
Expand chart
Data:; Chart: Axios Visuals

Stocks have steadily risen over the course of September, with the S&P edging up by around 3% month to date, while safe-haven U.S. Treasury prices have fallen, pushing yields higher, in a sign of investors' increasing appetite for risk.

Why it matters: The pickup in stock buying so far this month has been a major reversal of the trend seen in markets for most of the year. Capital flows had largely been going into bonds and money market funds and out of stocks.

  • Equity ETFs and mutual funds saw net selling in every month of the year except February, for a total of $93.6 billion of outflows through July 31.
  • Bond ETFs and mutual funds had seen inflows every month this year without exception, totaling $258.5 billion.

By the numbers: U.S. equity ETFs have seen 3 straight weeks of net inflows, culminating with $18 billion of funds for the week ending Sept. 18, according to the Investment Company Institute.

  • Bond ETFs conversely saw their lowest inflows since the week ending Aug. 7 during that period, ICI data shows.

The big picture: Without more good news on the trade war, investment flows could reverse out of stocks in the coming weeks and back into bonds. The yield on the benchmark 10-year Treasury note has clearly reversed course after touching 1.90% on Sept. 13, dropping all the way to 1.65% late Tuesday.

Go deeper: Markets are untrustworthy

Go deeper

Scoop: German foreign minister to travel to Israel with warning on annexation

Heiko Maas. Photo: Michael Kappeler/picture alliance via Getty Images

German Foreign Minister Heiko Maas is expected to travel to Israel next week to warn that there will be consequences if Israeli leaders move forward with plans to annex parts of the West Bank, Israeli officials and European diplomats tell me.

Why it matters: Israeli and European officials agree that if Israel goes ahead with unilateral annexation, the EU will respond with sanctions.

Minneapolis will ban police chokeholds following George Floyd's death

A memorial for George Floyd at the site of his death in Minneapolis. Photo: Steel Brooks/Anadolu Agency via Getty Images

Minneapolis has agreed to ban the use of police chokeholds and will require nearby officers to act to stop them in the wake of George Floyd's death, AP reports.

Why it matters: The agreement between the city and the Minnesota Department of Human Rights, which has launched an investigation into Floyd's death while in police custody, will be enforceable in court.

Better-than-expected jobs report boosts stock market

Data: Yahoo Finance; Chart: Axios

The S&P 500 jumped nearly 3% on Friday after a stronger-than-expected May jobs report showed that an economic recovery could be underway.

The state of play: Stocks have rallied since the worst of the coronavirus sell-off ended in late March and looked past a spate of ugly economic reports — not to mention civil unrest.