Crossroads
October 10, 2018

Stock Market Takes A Hit From Higher Interest Rates

 |  By: Know Your Market

Last week, the Federal Reserve Chairman, Jerome Powell, made the comment that we're a long way from neutral with regard to interest rates. The Fed continues to move forward with a plan to tighten monetary policy as well as raise interest rates, and that has given global markets an uneasy feeling as bond yields, led by an increase in the 10-year treasury to around 3.2 from 3.05 at the start of the month, have continued to rise. 

 

That, coupled with the ongoing concerns of tariffs and trade, brought sellers to the U.S. stock markets where tech stocks were quickly offloaded to be replaced by more stable stocks such as utilities. This led to the largest single day sell off that we've seen in our stock market since earlier this year. 

 

The softer tone there brought a softer tone to the commodity markets were crude oil, diesel, gasoline, cattle, hogs, soybeans, soybean meal, corn, wheat and milk all sell offs in their corresponding sessions. 

 

With regard to Class III milk, the average price from now through the end of the year fell 8 cents to 15.86. The Class IV average for the balance of the year fell 14 cents to an average price of $15 per cwt. Fortunately, a look at the CME spot trade revealed the slightly different tone.

 

Block and barrel cheese both rose a half a cent. However, they did not trade. Blocks finish at $1.66 while barrels end the session at $1.36 and a half, maintaining a spread of 29 and a half cents. Dry whey finished another half cent higher as well. It returns back to 56 and a quarter cent. Grade A nonfat dry milk remained unchanged and finishes once more at 85 and three-quarters while butters settled 2 and a quarter cent lower to finish at $2.22 and three-quarter cents per lb.

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