Globally, the STOXX Europe 600 captured a more modest 2.3% gain over the last quarter with better numbers coming out of Europe. The Japanese Nikkei had its best month of the year with a 3.6% surge in September. Australia has not fared nearly as well after falling for a fifth straight month with the weakness in commodities (especially iron-ore). Emerging markets were also weaker recently.
Gold Futures recorded a disappointing 2.8% loss for the month of September, which is the largest single month drop in nearly two years after the U.S. dollar finally appreciated as the long awaited US tax reform pressuring the 10 year Treasuries back above 2.3%. Crude oil witnessed a 12% improvement over the third quarter with most of those gains coming in September alone as all 4 weeks of the month were positive and pushed Oil Futures back up above $50 a barrel.
The S&P 500 was strong in the second and fourth weeks of the month. It is extended nicely above its 50 day moving average while moving bullishly higher.
Non-US developed market traded choppy but higher during September.
Emerging markets did not perform as well in September. They sold off during the third and fourth weeks, and spent two days below the 50 day moving average before bouncing back on the last day of the month. This makes emerging markets only tentatively bullish for October.
Real Estate was choppy until it broke down in the third week of the month also. It now trades below its 50 day moving after bouncing off the low prices of August. While this is not outright bearish, Real Estate looks like it may see some sideways action in October.
As noted in the S&P 500 sector graph above, commodity producers (energy and building materials companies) outperformed in September. Most of the gains were made in the first two weeks of the month as a continuation from the end of August.
Commodity prices did not support the move seen in the graph above. USCI could test its 50 day moving average in October.
US government bonds pulled back in the last three weeks of the month. After an initial test of the 50 day moving average, AGG has now traded three days below it. This could be a set up for a stronger bearish move in bonds, which would support the continuation of a bullish move in equities.
Inflation indexed bonds also suffered in last three weeks and are now trading below support after a failed bounce off the 50 day moving average.
Non -US bonds look weak. BNDX has made a break of its 50 day moving average and now traded three consecutive days below that level. All the bonds have upward sloping 50 day moving average that are above their 200 day moving averages, so bearishness is not overwhelming at this point.
Much of the bond's bearishness can be explained by USD bullishness, as witnessed in UUP's action in the last two weeks of the month. UUP has now traded above its downward sloping 50 day moving average for 4 days. The strength of USD bearishness is weakening.
