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.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.2891||1.230|
|Dollars per Euro||1.1748||1.096|
|Japanese Yen per Dollar||105.53||107.18|
|Canadian Dollars per Dollar||1.329||1.333|
|Mexican Peso per Dollar||21.825||19.795|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||1.31||1.25|
Treasury Yield Curve – 10/02/2020
As of close of business 10/01/2020
S&P Sector Performance (YTD) – 10/02/2020
|October 5||—||ISM Non-Manufacturing Index (September)|
|October 6||—||Trade Balance (August)|
|—||Fed Chair Powell on the Economic Outlook|
|October 7||—||FOMC Minutes (9/15-16)|
|—||Vice Presidential Debate (Salt Lake City)|
|October 8||—||Jobless Claims (week ending October 3)|
|October 12||—||Columbus Day (bond market closed)|
|October 29||—||Real GDP (3Q20, advance estimate)|
|November 3||—||Election Day|
|November 5||—||FOMC Policy Decision|
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