INSTRUCTIONS:

1. Calculate the Correlation Matrix for (Compute a Correlation Table in Excel)

- DJIA

- Nasdaq

- 10-Yr-T-Note

2. Write the analysis according to the three charts below:

- The relationship between Dow Jones Index Average (DJIA) and NASDAQ index

- The relationship between Dow Jones Index Average (DJIA) and 10-year Treasury Note Yield

- The relationship between 10-year Treasury Note Yield and NASDAQ index

3. Write a Summary

- Conclude the relationship between DJIA, NASDAQ and 10-Yr-T Note according to the causative factors from Table 2.

*Complete the instructions above with the attached file named "Stock and Bond Market Project".

*A sample of the project is provided with the attached file named "SAMPLE".

FIN 640 Dynamics of Stock and Bond Markets PROJECT Student: Tian Yu Feb 15, 14 REPORT: The three indicators of the health of stock and bond markets are illustrated in following three graphs: DJIA 16,600.00 16,400.00 16,200.00 16,000.00 15,800.00 DJIA 15,600.00 15,400.00 15,200.00 15,000.00 14,800.00 NASDAQ 4,300.00 4,250.00 4,200.00 4,150.00 4,100.00 4,050.00 4,000.00 3,950.00 3,900.00 3,850.00 NASDAQ 10-year T-notes 3 2.9 2.8 2.7 2.6 2.5 2.4 10-year T-notes APPENDIXES TABLE 1 Closing Data: DJIA NASDAQ and 10-Yr T-Note Price Date Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 21 Jan 22 Jan23 Jan24 Jan27 Jan28 Jan29 Jan30 Jan31 Feb3 Feb4 Feb5 Feb6 Feb7 Feb10 Feb11 Feb12 DJIA 16,257.94 16,373.86 16,481.94 16,417.01 16,458.56 16,414.44 16,373.34 16,197.35 15879.11 15837.8 8 15928.5 6 15738.7 9 15848.6 1 15698.8 5 15372.8 15445.2 4 15440.2 3 15628.5 3 15794.0 8 15,801.79 15,994.77 15,963.94 % Change -1.08% +0.68% +0.63% -0.37% +0.31% -0.27% -0.29% -1.08% -2.04% NASDAQ 4,113.30 4,183.02 4,214.88 4,218.69 4,197.58 4,225.76 4,243.00 4,218.87 4,128.17 % Change -1.32% +1.28% +0.44% +0.22% -0.24% -0.05% -0.08% -0.13% -1.69% 10-Yr TNote Yield 2.83 2.87 2.88 2.84 2.83 2.83 2.86 2.77 2.73 % Change -0.71% +0.70% +0.69% -1.41% 0% -0.35% +0.35% -2.53% -0.37% 2.77 +1.47% 2.75 -0.72% 2.67 -2.91% 2.69 +0.75% -0.26% 4083.61 -1.08% +0.57% 4097.96 -1.19% 4051.43 -1.14% +0.70% 4123.13 -0.94% 4103.88 -0.47% 2.67 -0.78% -2.08% 3996.96 -2.61% +0.86 4031.52 % 2.59 -3.15% 2.62 +1.43% -0.03% 4011.55 -0.50% 2.67 +1.75% +1.22% 4057.12 2.70 +1.27% 2.67 -1.87% 2.68 2.72 2.76 +0.37% +1.10% +1.62% +0.47% +0.35 % +1.77 % +1.03% 4125.86 +1.14 % +1.07% +0.05% +1.19% -0.19% 4148.17 4191.04 4,201.129 +0.56% +0.87% +0.24% TABLE 2 CAUSATIVE FACTORS/FORCES IMPACTING STOCK/BOND MARKETS Date Jan 13 Causative Factors 1. In the year's first seven trading days, the Dow Jones Industrial Average is down 0.8%. That isn't a big decline by stock-market standards, but it marks a clear deviation from the norm. 2. Argentina's government bonds fell sharply, as a deep drop in the value of the peso and dwindling foreign exchange reserves are raising questions about the country's ability to pay future debts. 3. The soft on auto sales that become a significant drag on retail sales from interest-rate-sensitive sectors may encourage a more cautious approach on easing stimulus efforts. Jan 14 4. Socioeconomic difficulties has had something of an emphasis in legislation so far this year, with Congress looking into unemployment benefits and a minimum wage increase. There has also been discussions of a $9 billion cut in food stamps as part of the new farm bill. Obviously, middle and lower class Americans are dependent on Congressional action for financial and economic policy that can change their chances of success for the better. So T-bond goes down. 1. Fed is taking its huge stimulus program to end quantitative easing of the market. 2. Loose monetary policy has delivered substantial benefits to borrowers of all kinds. 3. A turn in economic fortunes of the euro zone and the fading of investment destinations elsewhere around the world have driven a Jan 15 Jan 16 surge in buying of the region's government bonds. 1. J.P. Morgan JPM -0.26% Chase & Co. on Tuesday relinquished its position as the U.S. bank with the highest annual profit, capping a year marked by a slew of regulatory and legal issues. 2. When Related Cos. needed financing for its $1.3 billion bid for Time Warner Inc.TWX +1.76% 's Manhattan headquarters, it turned to a ready source of money: foreign buyers. Then, the interests will go up. 1.The Dow Jones Industrials (DJINDICES: ^DJI ) proved unable to sustain positive momentum from two strong sessions earlier in the week, as concerns about earnings reports led to a pullback of almost 65 points for the average. Yet, looking at the prospects for Friday, reports after the bell from Intel (NASDAQ: INTC ) and American Express (NYSE: AXP ) could lead investors to become even more nervous about the young earnings season's progress so far. 2. The Federal Reserve's unprecedented monetary actions in recent years have boosted certain areas of the economy. Specifically, the housing industry has enjoyed record low interest rates and rapidly appreciating prices. Many Americans are skeptical about the sustainability of this rebound, but homebuilders remains positive. Jan 17 1. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, made definitively positive economic statements in a speech. Lacker's economic outlook for 2014 was largely optimistic but tempered by recent history. So DJIA goes up. 2. Throughout the final three months of the year, industrial output increased at 6.8 percent annual rate, making the quarter the strongest since the April through June period of 2010. So DJIA goes up. 3. eferring to the day BlackBerry released its fiscal third quarter's financial results. "Everyone goes to buy at the same time." BlackBerry shares are up 22% so far this year. According to Andrew Left's Citron Research, it may be headed a lot higher. Jan 21 1. New retirement plan: work longer or until you die. Retirement is a popular goal among people in the workforce, but it's a long-term one that appears to be delayed due to poor saving habits and the recent financial crisis. Delayed retirement is affecting the workforce. Saving for retirement is a distant second place, with only 13 percent calling it a priority. Four in 10 Americans say saving and paying the bills is not possible at the same time. 2. Corporate-earnings reports are trickling in, and they aren't great. J.P. Morgan ChaseJPM +0.24% & Co. was a little better than anticipated; General Electric Co. GE +1.48%was as expected; Best Buy Co. BBY +0.85% was terrible. Money managers are wondering whether soft earnings will justify more stock gains, given the Dow Jones Industrial Average's 26.5% rise last year. That helps explain why the Dow is down 118 points to start the year. Jan 22 1. Pimco CEO Mohamed El-Erian to Leave Pimco in March. He manages $2 trillion as a largely autonomous unit of German insurer Allianz ALV.XE +0.12%SE. 2. Libya's sovereign-investment fund sued Goldman Sachs Group Inc. GS -0.36% over trades that soured during the financial crisis, escalating a dispute between the Wall Street firm and a highprofile client. Jan23 1. Investors Show Southwest Airlines Some Love. It makes the price of Southwest Airlines' shares goes up. Jan24 2. The Dow Jones Industrial Average briefly dipped below 16000 Friday morning for the first time this year, as the rout in emerging markets continued to spillover into U.S. stocks. The last time the Dow was below 16000 on an intraday basis was on Dec. 18, the day the Federal Reserve announced it would start dialing back its bondbuying program. 2. Signs of slowing growth in China and mediocre earnings reports have been enough to frighten investors who are concerned that the bull market may be on a collision course with its first significant price correction since 2011. On Thursday, the Dow fell 175.99 points, or 1.1%, to 16,197. 35. 3. Greenlight Capital's funds returned a net 6.5 percent in the fourthquarter, bringing the full year net return to 19.1 percent. Einhorn explains that Chipotle (NYSE:CMG) and U.S. Steel (NYSE:X) were two big losers for the hedge fund in the fourth-quarter, but let's take a look at the five biggest winners. Jan27 1. The emerging market is still unrest. The unrest emerging market and the even growth economic rate make the globe likely face further turmoil. That makes investors take a look at the portfolio. Investors will expect to invest in a safer asset, like US- Jan28 T- bond rather than equity market. 1. Turkey central bank increases the interest rate. Increasing interest rate aimed to control the inflation in turkey. t is still a good sign that emerging market is tending to be stable, but, investors keeping suspecting about the continuation of the policy. 2.U.S. Federal Reserve is widely expected to trim its asset buying program by another $10 billion a month at its policy meeting later in the session. This action will full the market with liquidity which benefits the stock market Jan29 1. Turkey follows Russian, Argentina, and many other developing countries to take emergency steps to battle plunging currency. 2. US government slow downs its bond reduction plan. y this way, the interest rate in T-bond will not decline as previous expected speed. Jan30 That maybe the reason 10 years T- bond yield rate increase today. 1.Fedeal Reserve will cut back further on its stimulus measures. The federal reserve's policy and the turbulence in energy market make investors hesitate and adjust their investment portfolio. At this Jan31 moment, investors will shade them from risk for a while. 1. Declining emerging-markets currencies such as the Turkish lira and the South African rand, coupled with a contraction in Chinese manufacturing, weighed heavily on markets as the Federal Reserve pushed forward with its tapering of monthly asset purchases this past week. All that uncertainty, along with the S&P 500's 30% gain in 2013, has raised investor expectations about quarterly earnings results. 2. Nowhere was that more apparent than with Amazon.com Inc. Results this past week. Amazon had promised a \"record-setting\" holiday season, but earnings and sales fell short of the Wall Street consensus. Shares of Amazon dropped 11% on Friday, the following day, triggering a Nasdaq short-sale restriction. 3. Disappointing earnings from Amazon.com Inc. and Mattel Inc. set the downbeat tone early in the session. The S&P 500 and the Dow Jones Industrial Average finished January with the steepest monthly declines since May 2012. Feb3 1. The S&P 500 index gained 30% last year, amid an improving U.S. economy and exceptionally loose Federal Reserve policy. Even more remarkable to many observers was that declines in the stock market were generally short and shallow. Accordingly, many investors entered 2014 expecting a slower advance marked by rocky stretchesa forecast that has been borne out by a 5% decline in the Dow Jones Industrial Average since the beginning of the year 2. HONG KONGWhen Freeport-McMoRan Copper & Gold Inc., FCX +1.81% the world's largest publicly traded copper producer, arranged $7 billion in financing last year, its roster of lenders included the usual catalog of European and U.S. banks. Feb4 1. Euro may be resurfacing as a safe have. The euro eked out a gain amid a wave of selling on Monday. Most major equity markets in Europe fell by more than 1% while the Dow Jones Industrial Average fell by more than 2%. The euro climbed against the dollar and pound. Feb5 Feb6 1. Friday's Employment Situation Report shows strong job creation, the positive outlook for the labor market recovery could be revived, but if the numbers are weak, concerns for the economy's ability to create jobs could be renewed. It makes 10-years T-bond goes up. 1. Draghi: European economic recovery is slow but on track. It makes DJIA goes up. Feb7 1. Economy adds 113,000 new jobs in January, jobless rate at 6.6%. This made the Dow Jones Industrial Average (DJINDICES: ^DJI ) closed the day up 165 points, or 1.06%, while the S&P 500 rose 1.33% today, and the Nasdaq jumped 1.69% higher. 2. When everyone else was beating up Apple shares two weeks ago, the company was quietly buying $14 billion dollars' worth of its stock on the cheap. So, as the stock took an 8% hit the morning after it said holiday iPhone sales were lower than anticipated, Apple took advantage of the situation buy gobbling up a few million shares. TABLE 3 I. The relationship between three indicator Correlation Matrix DJIA DJIA NASDAQ T-Note Y 1 0.879653924 0.573275223 NASDAQ 0.879653924 1 0.445683585 T-Note Y 0.573275223 0.445683585 1 1. The relationship between Dow Jones Index Average (DJIA) and NASDAG index 3.00% 2.00% 1.00% 0.00% %change in DJIA %Chg. In NASDAG -1.00% -2.00% -3.00% As illustrated in the line graph, it is likely the NASDAG and the DJIA index moved the same direction with different degree. The correlation coefficient between these two indicators is 0.88, which means that as DJIA moves up by 100 points, NASDAG moves up by 88 points as well and vice versa. 2. The relationship between Dow Jones Index Average (DJIA) and 10year Treasury Note Yield 3.00% 2.00% 1.00% 0.00% %change in DJIA %Chg. T-bills -1.00% -2.00% -3.00% -4.00% As we can see in line chart above, there was a positive relationship between DJIA and 10-year Treasury Note Yield. However, they move in different degree. Their correlation coefficient is 0.57, which reflects that DJIA change 1 point, 10-year Treasury Note Yield change 0.57 points. 3. The relationship between 10-year Treasury Note Yield and NASDAG index 3.00% 2.00% 1.00% 0.00% -1.00% -2.00% -3.00% -4.00% %Chg. In NASDAG %Chg. T-bills These two indicators were positively related. These two moved in the same direction but different degree. A correlation coefficient of 0.446 indicates a strong positive relationship between two indicators. We can clearly see that the correlations between stock index and bond index are positive. When investors invest more money in stock market, they do less in bond market, which means that demand in higher-return investment is strong, leading to rise in stock index. In contrast, weak demand for bond market caused to increase in yield and decrease in bond prices. Bond prices and yield move inversely. Running Head: PROJECT: DYNAMICS OF STOCK AND BOND MARKETS Project: Dynamics of Stock and Bond Markets FIN 640 Investment Analysis & Portfolio Management Wong Yien San Dr. Alfred Barzykowski Southern New Hampshire University July 3rd, 2016 PROJECT: DYNAMICS OF STOCK AND BOND MARKETS REPORT The three indicators of the health of stock and bond markets are illustrated in following three graphs: DJIA 18200 18000 17800 17600 DJIA 17400 17200 17000 NASDAQ 5000 4950 4900 4850 4800 4750 4700 4650 4600 4550 NASDAQ PROJECT: DYNAMICS OF STOCK AND BOND MARKETS 10 YR TREASURY NOTE YIELD 2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 10 YR TREASURY NOTE YIELD PROJECT: DYNAMICS OF STOCK AND BOND MARKETS APPENDIXES TABLE 1: CLOSING DATA : DJIA NASDAQ and 10 YR TREASURY NOTE PRICE DATE DJIA % NASDAQ % 10-YR-T NOTE % May 31st June 1st June 2nd June 3rd June 6th June 7th June 8th June 9th June 10th June 13th June 14th June 15th June 16th June 17th June 20th June 21st June 22nd June 23rd June 24th 17783.78 17787.78 17834.52 17807.06 17920.33 17938.28 18005.05 17985.19 17865.34 17732.48 17674.82 17640.17 17733.1 17675.16 17804.87 17829.73 17780.83 18011.07 17401.64 CHANGE 0.04 0.4674 -0.2746 1.1327 0.1795 0.6677 -0.1986 -1.1985 -1.3286 -0.5766 -0.3465 0.9293 -0.5794 1.2971 0.2486 -0.489 2.3024 -6.0943 4948.05 4952.05 4971.36 4942.52 4968.71 4961.75 4974.64 4958.62 4894.55 4848.44 4843.55 4834.93 4844.91 4800.34 4837.21 4843.76 4833.32 4910.04 4707.98 CHANGE 0.04 0.1931 -0.2884 0.2619 -0.0696 0.1289 -0.1602 -0.6407 -0.4611 -0.0489 -0.0862 0.0998 -0.4457 0.3687 0.0655 -0.1044 0.7672 -2.0206 YIELD 1.848 1.837 1.8 1.698 1.738 1.718 1.702 1.687 1.642 1.611 1.615 1.574 1.578 1.611 1.69 1.71 1.687 1.522 1.559 CHANGE -0.00011 -0.00037 -0.00102 0.0004 -0.0002 -0.00016 -0.00015 -0.00045 -0.00031 0.00004 -0.00041 0.00004 0.00033 0.00079 0.0002 -0.00023 -0.00165 0.00037 PROJECT: DYNAMICS OF STOCK AND BOND MARKETS TABLE 2: CAUSATIVE FACTORS, FORCES IMPACTING STOCK AND BOND MARKETS Date 6/05/16 Causative Factors 1. Saudi Arabia increased its light-crude prices to the Far East by 35 cents a barrel. It 2. 3. 4. also raised prices by 10 cents a barrel in the U.S., where Iran is still banned from selling. U.S. government bond yields fell sharply Friday and the 10-year German bond yield closed at a record low following the dismal jobs. Macquarie Group Ltd., Australia's largest investment bank has been buying and selling increasing amounts of oil, natural gas and fuel in the U.S., it now is North America's third-largest trader of physical gas, trailing only industry giants BP PLC and Royal Dutch Shell PLC. Cash has poured into muni-bond mutual funds this year, sending yields down to near-record lows. Municipal-bond funds had more than $632 billion in assets as of June 1, a record high going back to 1992. Investors have poured a net $22.5 billion into such mutual funds in 2016 through Wednesday, the best start to a year since 2009. They have pulled $39.97 billion from equity funds in the same time. Dell Inc. is set to sell $3.25 billion of junk-rated bonds Wednesday in order to finance its acquisition of EMC Corp. 6/08/16 1. 6/09/16 1. The drop in government bond yields around the globe has predominantly dragged down treasury yields. On Thursday, the 10-year Treasury yield fell as low as 1.661% before rebounding to 1.673% in recent action. But the Dow was at 17953 Thursday, marking a 15% advance from its February low that has brought the bluechip index near its all-time high of 18312.39. 2. U.S. oil prices have nearly doubled since their February low, fueling gains in commodity-sensitive sectors like energy and materials, and the dollar has weakened. The oil and dollar moves could brighten the outlook for corporate earnings down the line, which cause rebound in stocks. 6/14/16 1. German 10-Year Government Bond Yields Dip Below Zero at 0.008% for First Time. Other countries with debt also perceived as safethe U.S., Japan, and, interestingly, Britainall also saw their government-bond yields fall. Falling yields mean rising prices. 2. Microsoft to Acquire LinkedIn for $26.2 Billion; deal is for $196 per LinkedIn share, a 50% premium to Friday's close. 6/16/16 6/20/16 1. 1. The European Central Bank bought almost 2.26 billion of corporate bonds last PROJECT: DYNAMICS OF STOCK AND BOND MARKETS week, keeping up an aggressive pace for a new stimulus program that policy makers hope will help drive up stubbornly low inflation in the euro area. 6/24/16 1. The Japanese yen surged Friday and other Asian currencies were battered as voters in the U.K. upset market expectations and backed their nation leaving the European Union. Yen strengthened to as high as 99.00 against the U.S. dollarits strongest level since November 2013, and a 7.2% appreciation from its Thursday closing level. 2. Sterling is down more than 11% against the dollar in overnight trading, the biggest one-day drop since the last remnants of the gold standard were abandoned by President Richard Nixon in 1971. 3. Traditional safe-haven assets like the yen and gold jumped higher, but Japanese shares led a slump in regional stock markets. The Nikkei Stock Average closed down 7.9%, its steepest one-day loss for five years. 4. Hong Kong has maintained a policy of tying its currency to the U.S. dollar at HK$7.80 to the dollar, even though it fluctuates against other currencies including the British pound. 5. Eurozone stocks, particularly in Italy and Spain, drop sharply. The Euro Stoxx index, a broad measure of stocks in the Eurozone, closed down 7.7% on Friday. The euro fell 1.7% against the U.S. dollar and 4% against the Japanese yen. The common currency still rose 4.7% against the pound, which was hit hardest by Britain's decision to leave the EU. The German DAX and the French CAC 40 fell 6.8% and 8% respectively, the Italian FTSE MIB and the Spanish IBEX 35 both plunged by about 12%. TABLE 3: RELATIONSHOP BETWEEN EACH FACTOR PROJECT: DYNAMICS OF STOCK AND BOND MARKETS Running Head: PROJECT: DYNAMICS OF STOCK AND BOND MARKETS Project: Dynamics of Stock and Bond Markets FIN 640 Investment Analysis & Portfolio Management Wong Yien San Dr. Alfred Barzykowski Southern New Hampshire University July 3rd, 2016 PROJECT: DYNAMICS OF STOCK AND BOND MARKETS REPORT The three indicators of the health of stock and bond markets are illustrated in following three graphs: DJIA 18200 18000 17800 17600 DJIA 17400 17200 17000 NASDAQ 5000 4950 4900 4850 4800 4750 4700 4650 4600 4550 NASDAQ PROJECT: DYNAMICS OF STOCK AND BOND MARKETS 10 YR TREASURY NOTE YIELD 2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 10 YR TREASURY NOTE YIELD PROJECT: DYNAMICS OF STOCK AND BOND MARKETS APPENDIXES TABLE 1: CLOSING DATA : DJIA NASDAQ and 10 YR TREASURY NOTE PRICE DATE DJIA % NASDAQ % 10-YR-T NOTE % May 31st June 1st June 2nd June 3rd June 6th June 7th June 8th June 9th June 10th June 13th June 14th June 15th June 16th June 17th June 20th June 21st June 22nd June 23rd June 24th 17783.78 17787.78 17834.52 17807.06 17920.33 17938.28 18005.05 17985.19 17865.34 17732.48 17674.82 17640.17 17733.1 17675.16 17804.87 17829.73 17780.83 18011.07 17401.64 CHANGE 0.04 0.4674 -0.2746 1.1327 0.1795 0.6677 -0.1986 -1.1985 -1.3286 -0.5766 -0.3465 0.9293 -0.5794 1.2971 0.2486 -0.489 2.3024 -6.0943 4948.05 4952.05 4971.36 4942.52 4968.71 4961.75 4974.64 4958.62 4894.55 4848.44 4843.55 4834.93 4844.91 4800.34 4837.21 4843.76 4833.32 4910.04 4707.98 CHANGE 0.04 0.1931 -0.2884 0.2619 -0.0696 0.1289 -0.1602 -0.6407 -0.4611 -0.0489 -0.0862 0.0998 -0.4457 0.3687 0.0655 -0.1044 0.7672 -2.0206 YIELD 1.848 1.837 1.8 1.698 1.738 1.718 1.702 1.687 1.642 1.611 1.615 1.574 1.578 1.611 1.69 1.71 1.687 1.522 1.559 CHANGE -0.00011 -0.00037 -0.00102 0.0004 -0.0002 -0.00016 -0.00015 -0.00045 -0.00031 0.00004 -0.00041 0.00004 0.00033 0.00079 0.0002 -0.00023 -0.00165 0.00037 PROJECT: DYNAMICS OF STOCK AND BOND MARKETS TABLE 2: CAUSATIVE FACTORS, FORCES IMPACTING STOCK AND BOND MARKETS 6/16/16 1. The Swiss National Bank kept its negative interest rate policy unchanged despite Date Causative the Factors recent strengthening of the Swiss franc, suggesting that the bank has 1. Dollar rises against Euro, commodity currencies as continue to expectThe a approached the limits of how aggressively it can markets react to the strong currency. rise interest rates. The slippedThe 0.1% to $1.11315. the dollar SNBinheld its deposit rateeuro at -0.75%. target range for Meanwhile, the three-month Libor fell was 31/05/16 0.4% against the Japanese yen to Y110.7. The WSJ Dollar Index, which measures left unchanged at a range from -1.25% to -0.25%. the buck against a basket of 16 currencies, was essentially flat. 6/20/16 1. Saudi The European Central Bank bought almost billion of corporate bonds last It 2. Arabia increased its light-crude prices2.26 to the Far East by 35 cents a barrel. week, keeping upby an10 aggressive pace for a new stimulus program policyfrom also raised prices cents a barrel in the U.S., where Iran is stillthat banned makers hope will help drive up stubbornly low inflation in the euro area. selling. 3. U.S. government bond yields fell sharply Friday and the 10-year German bond 6/24/16 1. The Japanese yen surged Friday and other Asian currencies were battered as voters yield closed at a record low following the dismal jobs. in the U.K.Group upset market expectations andinvestment backed their nation the European 4. Macquarie Ltd., Australia's largest bank hasleaving been buying and Union. Yen strengthened to as high as 99.00 against the U.S. dollarits strongest selling increasing amounts of oil, natural gas and fuel in the U.S., it now is North 6/06/16 level sincethird-largest November 2013, a 7.2% appreciation its Thursday closing America's traderand of physical gas, trailing from only industry giants BP PLC level. and Royal Dutch Shell PLC. 2. Sterling is down more than 11% against the dollar in overnight trading, the biggest 5. Cash has poured into muni-bond mutual funds this year, sending yields down to one-day drop since the last remnants of the standard were abandoned by as of near-record lows. Municipal-bond funds hadgold more than $632 billion in assets President Richard Nixon in back 1971.to 1992. Investors have poured a net $22.5 billion June 1, a record high going 3. Traditional safe-haven assets like the yen and gold jumped higher, but Japanese into such mutual funds in 2016 through Wednesday, the best start to a year since shares led a slump in regional stock markets. The Nikkei Stock Average closed 2009. They have pulled $39.97 billion from equity funds in the same time. down 7.9%, its steepest one-day loss for five years. 1. Dell Inc. is set to sell $3.25 billion of junk-rated bonds Wednesday in order to fi4. Hong Kong has maintained a policy of tying its currency to the U.S. dollar at 6/08/16 nance its acquisition of EMC Corp. HK$7.80 to the dollar, even though it fluctuates against other currencies including the British pound. 1. The drop in government bond yields around the globe has predominantly dragged 5. Eurozone stocks, particularly in Italy and Spain, drop sharply. The Euro Stoxx down treasury yields. On Thursday, the 10-year Treasury yield fell as low as index, a broad measure of stocks in the Eurozone, closed down 7.7% on Friday. 1.661% before rebounding to 1.673% in recent action. But the Dow was at 17953 The euro fell 1.7% against the U.S. dollar and 4% against the Japanese yen. The Thursday, marking a 15% advance from its February low that has brought the bluecommon currency still rose 4.7% against the pound, which was hit hardest by chip index near its all-time high of 18312.39. Britain's decision to leave the EU. The German DAX and the French CAC 40 fell 6/09/16 2. U.S. oil prices have nearly doubled since their February low, fueling gains in com6.8% and 8% respectively, the Italian FTSE MIB and the Spanish IBEX 35 both modity-sensitive sectors like energy and materials, and the dollar has weakened. plunged by about 12%. The oil and dollar moves could brighten the outlook for corporate earnings down the line, which cause rebound in stocks. 1. German 10-Year Government Bond Yields Dip Below Zero at 0.008% for First 6/14/16 Time. Other countries with debt also perceived as safethe U.S., Japan, and, interestingly, Britainall also saw their government-bond yields fall. Falling yields mean rising prices. 2. Microsoft to Acquire LinkedIn for $26.2 Billion; deal is for $196 per LinkedIn share, a 50% premium to Friday's close. PROJECT: DYNAMICS OF STOCK AND BOND MARKETS TABLE 3: RELATIONSHOP BETWEEN EACH FACTOR 1. The relationship between Dow Jones Index Average (DJIA) and NASDAQ index 3 2 1 0 -1 -2 % CHANGE IN DJIA % CHANGE IN NASDAQ -3 -4 -5 -6 -7 2. The relationship between Dow Jones Index Average (DJIA) and 10 Year Treasury Note Yield PROJECT: DYNAMICS OF STOCK AND BOND MARKETS 1 0.5 0 -0.5 -1 % CHANGE IN NASDAQ % CHANGE IN 10-YR-T NOTE -1.5 -2 -2.5 3. The relationship between 10 Year Treasury Note Yield and NASDAQ index 3 2 1 0 -1 -2 -3 -4 -5 -6 -7 % CHANGE IN DJIA % CHANGE IN 10-YR-T NOTE PROJECT: DYNAMICS OF STOCK AND BOND MARKETS