The Ruble drops another 12+% to 72 RUB / USD. It just broke 60 yesterday and today its through 70, at one point breaking above 80, ... not a positive trend. The Russian central bank hiked its key interest rate to 17% from 10.5%. The yield on ten-year Russia government bonds jumped over 300 bps to 16.5%.
State-side, we had the release of housing starts. The numbers were mixed after factoring in the positive revisions of last months numbers. The S&P was indicated as low as -0.9%, but has subsequently recovered to down only -0.2%. I am now expecting the FOMC to be dovish given the recent turmoil in oil and the Ruble. The strong IP number yesterday was driven by autos and energy, but we know energy is weakening, so this number should be discounted.
Michael Grove, CFA