The DC Today - Thursday, August 17, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 17 August 2023
⏱️ 8 minutes
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Summary
Today's Post - https://bahnsen.co/3E5y8nq
10-year yields rose to 4.29% today on the way towards the October highs of last year at 4.34%, and the yield curve steepened with 2/10’s now at 65 bps. Today we saw jobless claims come in slightly better than expected and an upside surprise in the Philadelphia Manufacturing Survey data, both supporting higher growth expectations which is what moved rates on the long end for the day. Even though stocks and bonds sold off today, I am sticking with good economic news and still being good myself.
For all the back and forth on where rates will go, what the Fed will do, and will those things need to get restrictive enough to break something in the economy, so far, it has yet to materialize meaningfully. Keep in mind also that 10 YR rates floating around the mid 4’s, are hardly anything new. The 1960s, 1990s and 2000s all averaged as much, with plenty of positive real growth in GDP. The difference now is we have a vastly expanded global indebtedness paradigm, so the sustainability of how long growth can last along with higher rates comes more into question, and I suspect both will come in as time goes on.
Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the DC Today, your daily market synopsis of the Dividing Cafe, brought to you every Monday through Thursday to bring you up-to-date information and perspective on financial markets. |
| 0:14.3 | Hello and welcome to DC Today. It is Thursday, August 17th. Good to be with you all here again today. And actually, if you listened yesterday, today was a little bit of a groundhog day as far as how markets traded for the session. |
| 0:30.7 | Stocks opened up about 100 points or so, a little more in the morning and then sort of just drifted lower for the remainder of the day. |
| 0:37.4 | And we ended up closing basically at the lows, at least in stocks. |
| 0:41.8 | And Dow was down about 290 points on the day. |
| 0:44.8 | The interest rates were up on the day, which I think was what really kind of caused. |
| 0:49.8 | Some of the reasons that stocks sold off, you had interest rates pop above 430 on tens today. Interest rates have in same as yesterday. Interest rates have moved a little |
| 0:59.4 | bit higher. They've moved higher because growth expectations are moving a little higher. |
| 1:05.1 | We're essentially done with earnings season at this point and it was a little better than expected. |
| 1:09.9 | You have GDP forecast that has |
| 1:12.6 | been slowly but surely being inched up across Wall Street a little bit. And then today we had some |
| 1:18.8 | manufacturing data out of the Philly Fed survey come out far better than expected. Was it positive |
| 1:25.5 | 12? Don't worry about the absolute numbers as much, but just relatively speaking, it was a positive 12 when a negative 10 was expected. |
| 1:32.6 | So it's a pretty big outperformance in some manufacturing data out of the country, which is good. |
| 1:38.3 | And then we had some jobless claims that were a little better than expected. |
| 1:43.3 | But again, you know, rates being moving up on, especially on the long end of the curve, |
| 1:49.0 | following yesterday's Fed, you know, minutes being released and them talking about inflation |
| 1:53.9 | still being their number one worry and that maybe they would need to ratchet rates up a little |
| 1:57.7 | bit more. You've seen interest rates move up a little bit. |
| 2:00.7 | The high in October on the 10-year yield was 434. So we're getting there. We're basically |
| 2:06.6 | almost there. We were at 4.30 intram morning, 431, and closed at 429 on tens. The yield curve |
| 2:14.1 | steepened again a little bit today. Two's tens are now at 65 basis points. |
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