“Unless we see a decisive trend forward in the trajectory of US interest rates, investors will continue to be wary of emerging market assets�. Meanwhile, China’s yuan rose for the fourth day, trimming the biggest monthly loss since 1994, after Premier Li Keqiang signalled support for the currency following a devaluation that rattled global markets and shook confidence in the world’s second-largest economy. The head of the Fed’s New York branch, William Dudley, even said that the argument for a rate rise in September had diminished, markets took Fischer’s comments as relatively bullish, especially compared to Dudley’s. India’s Sensex shed 0.3 percent to 26,316.54 and Seoul’s Kospi advanced 0.2 percent to 1,941.49. U.S. crude (CLc1) was down 1.3 percent at $44.62 a barrel after jumping more than 6 percent on Friday on frenetic short-covering fueled by violence in Yemen, a storm in the Gulf of Mexico and refinery outages. The Dow Jones industrial average.DJI fell 50.18 points, or 0.30 percent, at 16,592.83. What is unknowable is whether the household sector is now strong enough to bear this unraveling, but Prof Feldstein at least believes that this uncertainty is no reason to postpone interest rate normalisation; for to do so would be to incur other risks, including the return of inflation. The Standard & Poor’s 500 index was down about 1.1%, as was the technology-packed Nasdaq composite, which was also down more than 1%. The rout in global equities this month erased more than $5 trillion from the value of shares as Chinese policy makers tried to bolster their market amid growing concern that the country’s economy may be in worse shape than analysts had estimated. Comments by Federal Reserve Vice Chairman Stanley Fischer on Friday suggested that the door was still open for a rate hike at the Fed’s next meeting due to take place September 16-17. Bombardiere also noted that some investors “wanted to buy a correction�, however they paused and started thinking as to when will the market decline will last after last week. “But the bottom line is the Chinese stock market had no real rights to be rallying like it was so we are seeing it come back down to earth�, says Bell. Germany’s Dax and France’s CAC 40 were both down almost a percentage point. The Shanghai Composite Index fell as much as 2.6 percent, but recovered to close 0.8 percent lower. Silver was down 0.1 percent at $14.59. The euro was mixed at $1.1287 and 135.91 yen from $1.1213 and 135.95 yen in US trade. “We can still expect to see some significant drops in the market until we get some direction from the Fed regarding a rate increase“, said John DeClue, chief investment officer of U.S. Bank Wealth Management. US 30-year Treasury bonds were last down 31/32 in price to yield 2.96 per cent, up from a yield of 2.91 per cent late Friday.

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