US and North Korea tensions ease slightly

___

Published Date 8/14/2017

Geopolitical tensions eased over the weekend. The Pentagon commenting there should be more discussions and less hardball talk; somewhat the same sentiment that was expressed in many comments over the weekend. Last week, there was a huge increase in fears, although markets were not that unsettled. This morning, prior to the 9:30 AM EDT open in the stock market, the indexes were pointing to a strong opening. Media relaxing. Last week the DJIA saw a minor pullback (-135 and NASDAQ -95), Those were inconsequential moves on a percentage basis.

The overriding news this morning in markets is the relaxing of the rhetoric from North Korea and the US. Tensions eased as the idea of a mass war finally is sinking in. There is little North Korea can gain, and the US isn’t about to make a move unless provoked by a military action from North Korea.

The dollar a little stronger this morning. Crude oil unchanged, gold down a little after increasing $32.00 last week on safe hedging against all the geopolitical chatter.

Our technicals remain positive in the near term. However, with less angst over North Korea and at these historic lows, continued economic improvement and stocks climbing, there is little reason to expect rates will decline. The one solid support keeping rates from rising much now is the lack of inflation; last week both PPI and CPI data were absent of any increase. The present price of the FNMA 3.5 30 yr. coupon is 103.20, support at 103.00; resistance at 103.50.

This Week’s Calendar:

Tuesday
- 8:30 am EDT July retail sales (+0.3%, ex auto sales +0.3%; control group +0.5% from -0.1% in June)
  - July import and export prices (imports +0.2%, exports +0.2%)
  - Aug Empire State manufacturing index (9.8 unch from July)
- 10:00 am June business inventories (+0.4%) Aug NHAB home price index (65 from 64 in July
Wednesday
- 7:00 am weekly MBA mortgage applications
- 8:30 am July housing starts and permits (starts 1225K +0.9%; permits 1246K +0.7%)
- 2:00 pm FOMC minutes from the July meeting)
Thursday
- 8:30 am weekly jobless claims (241K -3K)
  - August Philadelphia Fed business index (17 from 19.5 in July)
- 9:15 am July Industrial Production and factory use (production +0.3% from _+0.4% in June; factory use 76.7% from 76.6% in June)
Friday
- 10:00 am mid-month Aug U. of Michigan consumer sentiment index (93.9 from 93.4 final in July)

Source: TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.