The roundtable featuring Fed Reserve Chair Powell was a non-event.
Treasury yields continued to rise as the ISM Manufacturing Index posted the highest reading since November, exceeding all forecasts in a Bloomberg survey. The September index was bolstered by the strongest production growth since July 2022 as well as an expansion in factory employment.
Market sentiment indicators are now suggesting a 33% chance of another interest rate hike in November, up from about 25% before the data was released.
Bloomberg writes 10-year yields have risen during October in all but two of the past 15 years, perhaps under the guise that “next year things will be better.” A major issue at hand is that growth is already exceeding expectations, generating cost push or wage inflation for the first time since the late 1970s. Cost push inflation is like kryptonite for earnings.
Equites sold off as yields on five-year to 30-year Treasuries rose 10 basis points on the day. The 10-year benchmark bond hit its highest point since 2007, around 4.7%. Technologies posted a nominal gain.
Today the JOLTS Job Openings is released. FRB Chair Powell elevated this statistic to top tier. Volatility can increase if the data differs considerably from the consensus view.
Last night the foreign markets were down. London was up 0.12%, Paris down 0.46% and Frankfurt down 0.55%. China was up 0.10%, Japan down 1.64% and Hang Seng down 2.69%.
Futures are “soft” as the thirty-year Treasury trades to the highest level since 2007. The 10-year is off 15/32 to yield 4.75%. The 10-year is now 140 basis points higher from its April lows according to Bloomberg as the bond market is poised to decline for a record the third consecutive year.
