FEATURED MARKET DATA
Earnings Forecasts Down
More than 55% of S&P 500 companies reported third quarter earnings through October 31st, with the blended (actual plus estimates) earnings growth rate of 2.8% outpacing expectations for a decline of 0.3%. However, the magnitude of positive earnings surprises has so far run below five-year averages. Another trend in the third quarter is the slower blended year-over-year revenue growth rate of 2.1% compared to the 10-year average of 5.0%.
by Laura Fox FEATURED MARKET DATA
Why are Treasury Yields Rising?
The 5-Year U.S. Treasury yield rose about 0.35% in September. Inflation expectations, as represented by the Break even yield, rose only 0.08%. The difference between these two measures is the Real yield on Treasury Inflation Protected Securities (TIPS). With inflation expectations gradually declining over the past year, there is another reason for the rise in Treasury yields.
by Laura Fox Dr. Paul Ziegler Joins the PMA and MOCAAT Team
PMA, a premier full-service provider of financial and advisory services to local governments, is pleased to announce that Dr. Paul Ziegler has joined the team as Coordinator of Investment Services as of October 2, 2023. He will partner with the Missouri Capital Asset Advantage Treasury (MOCAAT) to serve school districts and other political subdivisions throughout the state of Missouri.
by Laura Fox Credit Update:
Deposit Volatility Wanes but Funding Costs Still Pressuring Banks
Over a decade of low short-term rates led to complacency for depositors and banks with respect to deposits. The deposit crisis of March 2023 alerted the broader market to the slow burn of core deposits – outflows that preceded the frenzy – either slowly getting reallocated to higher yielding money markets or customers spending down saved stimulus.
by Laura Fox FEATURED MARKET DATA
Higher For Longer
The yield on the 10-Year US Treasury rose in August to its highest level since 2007. The month saw real yields rise even more and are now at the highest level since 2009. Real, or inflation-adjusted, yields reflect the difference between the expected levels of inflation and nominal Treasury yields. Myriad factors impact nominal and real yields including supply and demand.
by Laura Fox FEATURED MARKET DATA
Fed’s Last Hike?
The last week of July brought a mixed bag of economic data and comments from the Federal Reserve Chair. Inflation declined as measured by the Fed’s preferred measure of inflation, Personal Consumption Expenditures (PCE). The chart below shows PCE excluding food and energy, which declined for the month on a decrease in the price of goods.
by Laura Fox FEATURED MARKET DATA
Stronger Data Help Lift Rates
Economic data was mostly stronger than expected in June. The Citi Economic Surprise Index, which measures the differences in actual and forecasted economic data, rose in June as data such as retail sales, consumer confidence and durable goods orders were all stronger than expected.
by Laura Fox FEATURED MARKET DATA
Persistent Inflation
While CPI and Core CPI have steadily declined over the past year, wage growth has remained elevated. Following a November 2022 speech by Federal Reserve Chair Powell, many economists and market participants have focused on the impact of wages on non-housing services inflation.
by Laura Fox PMA/ISJIT Achieves Significant Milestone – Reaching $2B in Fund Assets
PMA, a premier full-service provider of financial and advisory services to local governments, along with the Iowa Schools Joint Investment Trust (ISJIT), achieved a significant milestone by reaching an all-time high of $2B in assets in ISJIT and its Fixed Term Automated (FTA) Program as of May 23, 2023.
by Laura Fox FEATURED MARKET DATA
Fed Nearing End of Hikes
The “dot plots” released by the Fed in March depicted their plans to hike rates one more time this year and then hold rates steady. The Fed has also stated they remain data dependent and thus Personal Consumption Expenditures (PCE), the Fed’s preferred measure of inflation, is an important data point.
by Laura Fox 