Hello, this is Claire Ellerhorst, Senior Portfolio Manager at Fifth Third Bank with this week’s Economic Beat.
Major U.S. equity indices were mixed last week but ended lower for the month of September and the third quarter. The S&P 500 Index was down 0.7%, the Dow Jones Industrial Average was down 1.3% and the Nasdaq Composite was just barely positive for the week in total return. The S&P 500 ended the month of September down 4.8%, for a 3.3% decline for the third quarter. The 10-year U.S. Treasury yield rose to 4.58%, up from 4.09% at the end of August and from 3.84% at the end of the second quarter. The 2-year U.S. Treasury yield ended the quarter at 5.05%, also higher for the month and quarter but by a much smaller magnitude. Oil prices also continued to march higher last week.
Congress averted a government shutdown just ahead of the October 1 deadline. Speaker of the House Kevin McCarthy put forward a bill that will keep the government funded through mid-November, which was approved on a bipartisan basis in both chambers before being signed by President Biden on Saturday night. The agreement also means that government economic data releases will continue uninterrupted, which was noted as a potential complication for Federal Reserve decision making had a shutdown occurred.
In economic news, August core personal consumption expenditures (PCE) came in slightly softer than anticipated, with the lowest annual increase since May 2021. Core PCE is one of the Fed’s preferred measures of inflation and was up 3.9% year-over-year in August. Personal spending was up modestly less than expected and personal incomes were in line with consensus. Japan and Eurozone inflation data also surprised to the downside last week. U.S. core capital goods orders, a proxy for business investment, rose more than anticipated in August, while durable goods orders were surprisingly higher. New and pending home sales fell in August.
Labor market data in the week ahead includes the Job Openings and Labor Turnover Survey (JOLTS report) and September’s monthly employment situation report. Economists expect that employers added a healthy dose of jobs last month, though less than the previous month, and that the unemployment rate ticked lower.
As always, we’ll be watching and reporting back to you. Thank you.