Chief Economist Scott Brown discusses the latest market data.
Equities oscillated on several factors, including worries about China and developments in Washington. Lawmakers reached an agreement to avoid a government shutdown for the time being, extending borrowing authority through December 3. There was no agreement on infrastructure spending or the debt ceiling.
The economic data releases were generally unsurprising. However, inflation-adjusted consumer spending (68% of gross domestic product) is now tracking at about a 0.5% annual rate in 3Q21, sharply lower than in the first and second quarters (+11.4% and +12.0%, respectively). Durable goods orders were strong in August, boosted by a surge in civilian aircraft orders. The ISM Manufacturing Index showed strength in new orders and production but also reflected ongoing supply chain issues. The Conference Board’s Consumer Confidence Index weakened further.
Next week: The September employment report, the last before the November 2 to 3 FOMC meeting, arrives Friday. As Fed Chair Powell noted, “it wouldn’t take a knockout, great, super-strong employment report” to meet the test for tapering. A “reasonably good” report would suffice. The delta variant was likely a restraint on job growth, but a temporary one. Seasonal adjustment is often an issue in September – we normally add around 1.5 million (unadjusted) education jobs and lose about a million (unadjusted) jobs outside of education.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.3543||1.355|
|Dollars per Euro||1.1599||1.161|
|Japanese Yen per Dollar||128.83||123.97|
|Canadian Dollars per Dollar||1.267||1.329|
|Mexican Peso per Dollar||20.531||21.825|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||1.74||1.45|
Treasury Yield Curve – 10/01/2021
As of close of business 09/30/2021
S&P Sector Performance (YTD) – 10/01/2021
ISM Services Index (September)
|October 4||—||Factory Orders (August)|
|October 5||—||Trade Balance (August)|
|October 6||—||ADP Payroll Estimate (September)|
|October 7||—||Jobless Claims (week ending October 2)|
|October 8||—||Employment Report (September)|
|October 11||—||Columbus Day/Indigenous Peoples Day (bond market closed)|
|October 13||—||Consumer Price Index (September)|
|—||FOMC Minutes (September 21-22)|
|October 15||—||Retail Sales (September)|
|November 3||—||FOMC Policy Decision|
|—||Employment Report (October)|
All expressions of opinion reflect the judgment of the author 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.
The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor’s returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.
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 September 30, 2021.