Market Commentary 11/1/19

A better-than-expected October Jobs Report capped off a robust week of economic news.    

Positive earnings from America’s best companies for the third quarter reconfirmed that the U.S. economy remains the envy of the developed world and has the resilience to adjust to a difficult trading environment with China.

On Wednesday, the Fed lowered short-term interest rates in what may be the last of rate cuts for a while. However, the Fed’s actions the past few months have steepened the yield curve and pushed financing costs lower, helping to keep the ball rolling on economic expansion. While business investments are slowing, the job market and consumer confidence readings remain strong, and housing remains a tailwind for growth. 

Across the pond, the fear of a chaotic October 31st Brexit was put to rest as well, at least for now. This is all positive for the market and potentially bad for bonds. 

Capping off the week, the September Jobs Report was solid and better than expected with positive revisions to both August and September.  The unemployment rate was a tick higher, up to 3.60% from 3.500%, wage inflation clocked in at 3% annually, and the Labor Force Participation Rate (LFPR) moved higher. In summary, it was a very good jobs picture for the U.S.

With so much good news to share, interest rates have been moving moderately higher, as predicted. Personally, we see no recession and can easily see the 10-year Treasury moving back up to near 2.000% given all the positive economic data recently released. Mortgage rates have been on the move as well. We continue to advise that locking-in rates at these levels is prudent, especially with interest rates still near historic lows.