Economy
Interest rates continue to climb on the longer end of the curve, with the 10-year Treasury briefly above 5.2%. This has a direct relationship with consumer borrowing rates, such as mortgages and auto loans. Speaking of mortgages, rates rose above 7% this week for the first time since January 2025. The recent surge higher in interest rates can be attributed to several things happening all at once, some good and some not-so-good. In the "good" camp we have a resilient labor market coming off of a good jobs report a few weeks ago. We'll get the most recent reading on the health of the labor market this coming Friday morning. The "not-so-good" news isn't really anything new, but inflation remains high, the deficit is out of control, and recent comments from the Fed have bond traders pricing in a rate hike at the October 30 meeting.
Markets
Despite the move in interest rates, stocks were positive this week with the S&P 500 up 1.21%. Oil prices remained volatile as reports of indirect talks between the US and Iran discussing reopening the Strait of Hormuz came out. Nothing concrete came of it but it led to a late week decline in oil prices that helped lift stocks. We're still a few weeks out from heading in to the final earnings season of the year. Despite the uncertainty with Iran and the oil market, the Fed and interest rates, inflation and the labor market, analysts are still increasing their earnings estimates. The saying goes, markets will climb a wall of worry. We're sitting just 0.7% below the all-time high for the S&P 500.
What We're Reading
- The Surprise Social Security Benefit That Goes to Parents Who Have Kids Late - WSJ
- You Saved for Retirement. Now Comes the Hard Part - Morningstar
Have a great weekend.
Dogwood Wealth Management