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Market Snapshot 10/27/23- Nevada Day

Good Friday AM on this Nevada Day,

Consumer spending numbers came in much higher than expected, nearly double personal income growth. This is unsustainable given record levels of consumer debt and low savings. High consumer spending is what drove the strong GDP number, as consumption makes up around 70% of GDP. Interest rates may not fall further until consumers reduce spending and deleverage their balance sheets. The consumer will likely be forced to slow down spending. The bond market reacted positively to the economic data, with yields touching resistance at 5% but not breaking through.

Currently at 4.84%, if yields break below support at 4.55%, they could fall further.

Mortgage-backed securities are stuck between support and resistance. Failure to break above resistance could push prices down. Personal income was lower than expected, while spending and inflation numbers came in a bit higher. Consumer sentiment improved but not as much as one might expect given high spending. The data presents a puzzle. In summary, the analyst expressed concern about unsustainable consumer spending levels and debt and believes interest rates may not decline or the yield curve un-invert until consumers reduce spending and debt accumulation.

For some perspective on today’s mortgage interest rates, here’s how average 30-year rates have changed from year to year over the past five decades.

And last, Taylor Swift is a billionaire.

Please remain safe and healthy, make today great!