10-YEAR TREASURY YIELD HITS A 7-YEAR PEAK
Friday, the yield on the 10-year note reached 3.23%, its highest level since 2011. Its yield rose dramatically last week, influenced by hawkish comments from Federal Reserve chair Jerome Powell and reports showing minimal unemployment and a swiftly expanding business sector. All this strengthened investor perception that the U.S. economy has hit its stride. It also suggested a near future with recurring interest rate hikes, costlier borrowing, and subdued spending. That possibility weighed on equities. For the week, the Nasdaq Composite fell 3.21% to 7,788.45, and the S&P 500, 0.97% to 2,885.57; the Dow Industrials retreated just 0.04% to 26,447.05.1,2
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LESS HIRING IN SEPTEMBER
A look at the Department of Labor's latest jobs report reveals good news and bad news. The good news? Unemployment declined further to 3.7%, annualized wage growth improved to 3.4% in the third quarter, and monthly net hiring averaged 190,000 in Q3. The bad news? Payrolls expanded with just 134,000 net new jobs last month, as underemployment ticked up 0.1% to 7.5% and year-over-year wage growth slowed to 2.8%. Some economists feel that Hurricane Florence significantly impacted the September data.3
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SERVICE SECTOR EXPANDS AT A HISTORIC PACE
The Institute for Supply Management said its non-manufacturing purchasing manager index rose 3.1 points in September to 61.6. It has never been that high in its decade-long history. ISM's PMI for the factory sector took a slight dip in September, slipping from 61.3 to 59.8 but still showing fast expansion.4
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OIL MAKES ANOTHER WEEKLY ADVANCE
Crude is on a 4-week winning streak. At Friday's closing bell, the price stood at $74.34 a barrel on the NYMEX, reflecting a 1.5% rise in five days. Again, worries over upcoming U.S. sanctions against Iran helped to send prices higher. WTI crude settled at $76.41 Wednesday, which approached a 4-year peak for the commodity.5
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THIS WEEK
:
While the U.S. bond market is closed Monday in observance of Columbus Day, U.S. stock exchanges are open for business; no major economic or earnings releases are scheduled. | Nothing major is slated for Tuesday, either. | Wednesday, investors consider the September Producer Price Index and earnings from Fastenal. | On Thursday, the September Consumer Price Index appears, along with the latest initial jobless claims report and earnings news from Delta Air Lines and Walgreens Boots Alliance. | The fall earnings season begins Friday, with announcements from Citigroup, JPMorgan Chase, PNC Financial Services Group, and Wells Fargo; in addition, the University of Michigan's preliminary October consumer sentiment index arrives.
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% CHANGE
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Y-T-D
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1-YR CHG
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5-YR AVG
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10-YR AVG
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DJIA
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6.99
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16.12
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15.09
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16.57
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NASDAQ
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12.82
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18.27
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20.91
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31.81
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S&P 500
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7.93
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13.07
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14.14
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17.30
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REAL YIELD
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8/10 RATE
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1 YR AGO
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5 YRS AGO
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10 YRS AGO
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10 YR TIPS
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1.07
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0.49
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0.46
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2.21
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Sources: wsj.com, bigcharts.com, treasury.gov - 10/5/182,6,7,8
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
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President
Wealth Advisor
Terry Maziarka
Operations Manager
847.550.6100
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WEEKLY QUOTE
"Success is the maximum utilization of the ability that you have."
- ZIG ZIGLAR
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WEEKLY TIP
Yes,
clipping coupons can
save you money at the grocery store - but keep in mind, coupon deals may lead you to buy unneeded items. The cost of the extra purchases could cancel out any coupon savings.
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WEEKLY RIDDLE
They can pass through state after state, all while never moving. What are they?
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LAST WEEK'S RIDDLE:
What can be broken, but should not be forgotten?
ANSWER:
A promise.
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