Hope all is well with you and your family. A three-week string of gains ended as the major stock indexes slipped around 1% entering the busiest stretch of what’s so far been a strong quarterly earnings season. Stocks couldn’t recover from a Monday decline fueled by a setback in congressional negotiations over a coronavirus relief package. The markets remain volatile and look to open down this morning. Here's what you need to know from last week broken down by Dirty Harry quotes.
You've got to ask yourself a question: 'do I feel lucky?
Treasury yields surged. Luck seems to be running out on the bond market as rates are finally starting to move higher. The yield of the 10-year U.S. Treasury bond climbed on Friday for a seventh straight trading day to an intraday peak of 0.87%, the highest level in more than four months. As recently as early August, the benchmark 10-year yield was as low as 0.52%. As I have stated numerous times before I am not a believer in bonds at this time. I think we will start to see bond prices fall as the trend interest rates will be to move higher. Borrowing money (refinancing mortgages) on the other hand at these low rates does still make sense.
Go ahead. Make my day.
Congress refuses to make the market's day. It was another on-again, off-again week on prospects for further congressional aid to deal with the coronavirus’ economic impact. The uncertainty extended into Friday, when a top White House economist said talks in Congress appeared to have stalled, sparking concern that another round of aid may not be approved before the November 3 election. Even without a relief package the economy appears to be regaining strength. A monthly indicator of U.S. economic activity signaled the fastest rate of expansion in 20 months for both the services and manufacturing segments of the economy. However, the survey data from the IHS Markit Purchasing Managers’ Index also showed that companies acted cautiously when it comes to spending.
Evidence? What the hell do you call that?
Evidence of an economic recovery worldwide is emerging. China the first economy to shut down and the first to reopen reported that its economy grew at a 4.9% annual rate in the third quarter, extending its recovery from the pandemic. The quarterly gain for the world’s second-largest economy was faster than the 3.2% rate of increase in the second quarter, when other major economies were suffering steep GDP declines. Could the U.S. report similar growth? This coming Thursday’s release of the government’s initial estimate of third-quarter U.S. economic growth is expected to be the most closely watched report of the week, as it could produce a record-breaking growth figure for a single quarter. In this year’s second quarter, GDP plunged 31.4% amid the pandemic. For the third quarter, economists are expecting a sharp reversal, with most forecasting growth of around 30.0%.
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