Thursday, November 2

Time to hold on your bonds

The ISM Manufacturing Index disappointingly fell to 51.2 in October from 52.9 last month. While this is still higher than the psychologically important 50 (<50 means a sign of slowing economy), the data indicates the US is undergoing the slowest growth in more than 3 years.

US Treasuries, the primary indicator of all bond prices, rose further to 102 14/32 (yield at 4.56%), further strengthening the market belief of an imminent slowdown of the US economy. Time to hold on your bonds!

Because of this and a number of disappointing company earnings results, DJIA, S&P500 and Nasdaq dropped 0.4%, 0.7% and 1.4% respectively.

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