11/03/2024
Economic news this month – Treasury bond yields and mortgage interest rates jumped in October as data indicated that the economy was picking up steam. The month began with a jobs report showing that 254,000 new jobs were added in September. That shocked experts who estimated that there would be 160,000 new jobs added. Wages increased as well showing a 4.2% annual increase, up from a 3.8% annual increase in the previous three months. Retail sales and consumer confidence jumped as well. The third quarter Gross Domestic Product initial estimate showed that the economy grew at a healthy rate of 2.8% in the quarter. The general consensus had been that the economy was slowing, especially after July’s weak hiring number and a jump in the unemployment rate, but this data suggested that the economy was picking up steam. When the economy picks up consumers spend money which could ignite inflation. Fortunately, the inflation indexes were in line with expectations. The September Consumer Price Index (CPI) and the Producer Price Index (PPI) were released. The CPI, one of the broadest measures of inflation showed that consumer prices increased 2.4% from one year ago, down from a 2.5% annual increase in August. The 2.4% increase in September marked the smallest annual increase in inflation since February 2021. The PPI, a measure of wholesale prices, showed prices for goods and services that producers pay increased 1.8% from last September. The Personal Consumption Expenditures Price Index (PCE), a fed favorite, showed a 2.1% year-over-year increase, its smallest increase since early 2021. The question for investors is whether the news of higher wages, the unemployment rate beginning to drop again from its July high, consumer confidence and retail sales rising could reverse the trend of inflation dropping to acceptable levels in the coming months. Many felt the answer was yes and bond yields and mortgage rates surged. In fact, treasury bond yields increased so much that the Dow, NASDAQ, and S&P which all hit record highs in October following six straight weeks of gains, dropped at the end of the month to close the month lower on long-term interest rate fears.
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Economic news this month – Treasury bond yields and mortgage interest rates jumped in October as data indicated that the economy was picking up steam. The month began with a jobs report showing that 254,000 new jobs were added in September. That shocked experts who estimated that there would be 16...