US consumer sentiment strengthened for a third straight month in October, according to survey data published by the University of Michigan. The school’s widely-read sentiment index edged higher this month to its highest reading since April. “This month’s increase was primarily due to modest improvements in buying conditions for durables, in part due to easing interest rates,” reports Joanne Hsu, surveys of consumers director at the university.
The Capital Spectator is traveling for next several days. The usual schedule resumes on Monday, Oct. 28. Cheers!
US existing home sales fell to a 14-year low in September. “The factors that would drive higher home sales —- such as mortgage rates meaningfully lower now compared to one year ago, inventory beginning to increase and, of course, jobs continuously being added to the economy —- and yet home sales are stuck at low levels,” says Lawrence Yun, the chief economist at the National Association of Realtors. In sharp contrast, sales of new homes has been trending higher in recent years.
Will the two hurricanes that hit the US Southeast region recently weigh on the upcoming third-quarter GDP data? Probably, although for the moment the impact is expected to be minimal, based on set of nowcasts compiled by CapitalSpectator.com.
US economy will continue to provide much of the expected global growth this year and through 2025, the IMF projects. In its new World Economic Outlook report, the IMF lifted its 2024 and 2025 growth estimates for the US. The upgrade to America’s economic forecasts contrasts with flat or slightly lower estimates for other developed nations. For the world economy, “growth is expected to remain stable yet underwhelming,” the IMF reports. “At 3.2% in 2024 and 2025, the global growth projection is virtually unchanged” from this year’s April and July estimates.
Will the summer rally in bonds survive the autumn? Fresh doubts are bubbling as the market reconsiders a range of risk factors, including renewed skepticism about the Federal Reserve’s commitment to cutting interest rates.
US 10-year Treasury yield rises to 4.21%, highest level since late-July. “With less than two weeks now until the US elections, concerns about the fiscal outlook and its potential upward pressure on inflation have become more acute,” says Robert Dishner, senior portfolio manager at Neuberger Berman.
The case for international diversification from a US-investor perspective usually centers on how to carve up a global equities allocation. The global bond footprint, by contrast, tends to be an after-thought for most investors. But after reviewing year-to-date results for bonds ex-US, strategists may be inspired to rethink the oversight.
US housing starts remain subdued in September. Residential housing construction eased 0.5% to 1.35 million units last month, which is close to the lowest level since the pandemic was raging. “With affordability still a pressing issue in many regions, home building will likely remain stagnant until the Fed is well into its easing cycle and mortgage rates have fallen another one percentage point,” writes Sal Guatieri, senior economist at BMO Capital Markets, in a note.
● The Art of Uncertainty: How to Navigate Chance, Ignorance, Risk and Luck
David Spiegelhalter
Review via The Economist
… books that successfully communicate how mathematicians think, but are aimed at those not already in the tribe, are both valuable and rare. Over the decades many eager students have devoured Thomas Körner’s “The Pleasures of Counting” (1996) and Sir Timothy Gowers’s “Mathematics: A Very Short Introduction” (2002). Now Sir David Spiegelhalter, emeritus professor of statistics at the University of Cambridge, has added to the genre with “The Art of Uncertainty”. His new book will appeal to many more than just aspiring mathematicians, for its topic is universal: how to analyse chance, ignorance and risk.