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Chief Economist Scott Brown discusses the latest market data.

There was a lot of economic data to digest, but market participants focused more on the chaotic presidential debate and the news that President Trump tested positive for COVID-19.

Nonfarm payrolls rose by 661,000 in the initial estimate for September; good, but slower than in recent months and still 10.7 million (7.0%) short of where we were in February. The unemployment rate edged down to 7.9%, but largely because people exited the labor force (to be counted as “unemployed” you have to be actively looking for a job, and many give up). If labor force growth had remained on trend after February, the unemployment rate would be reported as closer to 10.6%.

Personal income fell 2.7% in August, as unemployment benefits fell 53.0%. Aggregate private-sector wages and salaries rose 1.3% (-0.4% y/y), 4.2% below the February level. Personal spending rose 1.0%, up 18.6% from April, but down 3.4% from February and mixed (gains in consumer durables, ongoing weakness in consumer services). Real GDP fell at a 31.4% annual rate in the third estimate for 2Q20 (not much different from the second estimate of -31.7%). The Conference Board’s Consumer Confidence Index rose to 101.8 in September, up from 86.3 in August (it was 132.6 in February). The ISM Manufacturing Index edged back to 55.4 in September, from 56.0 in August, with details consistent with more moderate growth.

Next week, the economic calendar is light. The ISM Non-Manufacturing Index should be consistent with moderate growth in the overall economy. The trade balance should have widened in August. Jobless claims are expected to be little changed, as California remains in a two-week pause in claims processing. The vice presidential debate is likely to be a little more “presidential.”  FOMC minutes are unlikely to shed new light on the Fed’s thinking. Chair Powell will speak on the economic outlook on Tuesday morning.

Indices

Consumer Money Rates

Currencies

Commodities

Bond Rates

Treasury Yield Curve – 10/02/2020

As of close of business 10/01/2020

S&P Sector Performance (YTD) – 10/02/2020

Economic Calendar

All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.

Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business October 1, 2020.