The market premium for the US 10-year yield over a “fair value” estimate calculated by CapitalSpectator.com continued to narrow in September. The smaller spread extends a downside trend in recent months following a period of an extremely high market premium vs. the fair value, which is drawn from the average of three models.
Macro Briefing: 11 October 2024
US consumer inflation’s one-year trend slowed again in September, but the core rate rose. The mixed data suggests that disinflation may slow or pause in the months ahead. “September’s CPI report has good news and bad news for the Fed,” Eugenio Aleman, Raymond James’ chief economist, wrote in a note. Citing the softer housing component in the inflation report, which slowed to its lowest annual rate since February 2022, he advises: “The good news is that shelter costs slowed down to 0.2%, month-on-month, and 4.9%, year-over-year. However, it also showed that there are still plenty of upside risks for inflation going forward.” The “shelter” category accounts for more than one-third of the overall CPI.
Mixed Signals Persist For Risk-On Sentiment Outlook
Investor sentiment has wobbled recently, but there’s still room for debate on whether the appetite for risk has peaked for this market cycle. Using a set of ETF pairs to gauge conditions shows that the strongest case for optimism resides in a global asset allocation framework. A more granular view of markets, however, paints a mixed picture, based on prices through Wednesday’s close (Oct. 9).
Macro Briefing: 10 October 2024
More than 3 million residents are without power in Florida as Hurricane Milton moves across the state, leaving a path of destruction. The storm is expected to move off the state’s East Coast into the Atlantic Ocean later today.
US stocks rallied to a new record high on Wednesday, based on the S&P 500 Index. “The stock market is reaching new heights even as assets in money market mutual funds rose to a record $6.5 trillion during the October 2 week,” observe analysts at Yardeni.com. “That’s quite remarkable. Imagine the meltup in stock prices if the Fed continues to lower interest rates.”
Revised Q3 GDP Nowcast Continues To Indicate Solid US Growth
Economic output for the US remains on track to increase at a robust pace in the government’s upcoming third quarter GDP report scheduled for Oct. 30, based on the median nowcast via several sources compiled by CapitalSpectator.com.
Macro Briefing: 9 October 2024
Florida residents fled the Tampa Bay region ahead of Hurricane Milton, which is expected to make landfall tonight. The storm “poses a major threat to life and property as it hammers the state with destructive storm surge, devastating wind damage, potentially catastrophic flooding rainfall and several tornadoes,” the Weather Channel warns. Expected damages are projected to reach $175 billion, according to leading Wall Street analysts.
US trade deficit narrowed to smallest gap in five month in August. Exports increased 2%, the most since February, while imports fell 0.9%.
Rebound In Money Supply Growth Is New Tailwind For US Economy
There are several reasons for downplaying the recent recession warnings. Last week’s dramatically stronger-than-expected rise in September payrolls is one. The revival of US money supply growth in year-over-year terms is another.
Macro Briefing: 8 October 2024
Hurricane Milton threatens “grave danger” for west-central Florida, reports The Weather Channel. Citing the National Hurricane Center: “Milton has the potential to be one of the most destructive hurricanes on record” for the Tampa-St. Pete region.
Emerging Markets Stocks Tied With US Equities Year To Date
As rebounds go, the current revival in the fortunes of stocks in emerging markets surely ranks as one of the more impressive feats in recent history. The caveat: The turnaround is primarily due to surging share prices in China. Exclude China and broadly defined EM stocks are posting substantially softer results, based on a set of ETFs through Friday’s close (Oct. 4).
Macro Briefing: 7 October 2024
Florida braces for a direct hit from Hurricane Milton, which is expected to make landfall on Wednesday in the Tampa Bay area. The storm, with maximum sustained winds of 100 mph, is projected to move across central Florida.
US payrolls rose more than expected in September, according to Labor Department data. The 254,000 increase beat expectations by a wide margin. The unemployment rate ticked down to 4.1%, marking the second month of lower joblessness. The government’s report also revised up previous estimates for new job creation in August and July.
