Market Drama

Welcome to this week’s Market Drama!

• The Stock Market:
  • The S&P 500 was up 0.5%.
  • Nasdaq was up 1.6%.
  • We had a couple weeks in a row of negative stock market performance.  
• The Bond Market
  • Yield continued to rise.
  • It was up 0.2% to 4.79, which is a yield level we had not seen since 2007.
    • Economic data we can point to this:
      • September employment data came out and payroll gains came in at 336,000. Which was significantly higher than the consensus expected. 
      • Unemployment rate held steady at 3.8%.
• Economic Snapsot:
  • Average hourly earnings came in at 4.15 year-over-year growth.
    • This is the fourth consecutive month in which we’ve seen the wage growth number come down – big positive development.
  • If wage growth and core inflation continue to come down, it might give the confidence for the Fed to lower interest rates. 
  • Rule of thumb for ten-year treasury yield – there is a relationship between nominal GDP growth and the ten-year treasury yield.
    • Long-term bonds try to give a proxy for inflation + real economic growth (nominal GDP growth). 

Coming up next week: 

• CPI and PPI data. 

Stay tuned for next week. 

– Andres