The DC Today - Wednesday, October 4, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 4 October 2023
⏱️ 8 minutes
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Summary
Today's Post - https://bahnsen.co/46j9PPy
Following another down day yesterday, we got a little reprieve in markets, with both stocks and bonds posting gains on the day. The biggest economic news on the day was the miss in ADP Payroll numbers, which starkly contrasted with yesterday's big upside surprise in the jobs openings report. More openings but fewer private payrolls could either mean there is a cyclicality or variability around the timing of correlation between the two or could have just been from the number of new job openings TBG just posted this month. Still, either way, the more significant number will be this Friday when nonfarm payroll numbers come out.
While yields came off following today's economic data during the trading day, it is notable to see 10-year yields hit 4.88% in overnight trading and 30-year treasuries reach 5%. As a result, US debt interest expense is now just over 14% of tax revenue, which has not been the case since the late 1990s and has historically been a threshold in which fiscal austerity begins to show. Fact notwithstanding, last night, we also saw the ousting of the Speaker of the House, Kevin McCarthy, by his party for the first time in history for getting a bill passed not to cut spending to avoid a government shutdown.
I strongly suspect deficits at 7% of GDP during full employment will keep volatility high in Washington as tough decisions must be made. While the Fed says higher rates are here for longer, I remain skeptical, given the tightening financial conditions we have already seen.
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. |
| 0:14.2 | Hello and welcome to D.C. today. It is Wednesday, October the 4th, Brian Saitel. Good to be with you again here today. |
| 0:23.5 | And for once, actually, for a nice change, we had an up market. |
| 0:28.6 | So we had a good day in markets. |
| 0:30.3 | Not amazingly good, but we'll take it. |
| 0:32.4 | The Dow was up about 127 points on the day. |
| 0:36.9 | NASDAQ was up about 0.8%. And then the S&P was up, I'm sorry, NASDAQ was up 1.3, |
| 0:42.9 | S&P was up 0.8. |
| 0:44.0 | So fairly a strong session, which is nice to see yields came off a little bit today. |
| 0:48.8 | We actually, overnight at least, though, we had some high prints on tens and 30s. |
| 0:53.9 | Tens printed 488 |
| 0:55.3 | overnight we closed at 474 on the day so it came down a little bit on the day but that was that was a |
| 1:02.9 | higher number than we've seen in quite a while and 30-year bonds actually went over 5 percent |
| 1:07.5 | hasn't haven't seen that since 2007 so that that was intranite. Then we got some |
| 1:12.7 | economic data today that cooled things down a little bit. You know, rates really had been on a |
| 1:18.9 | tear. And for a long time, rates had, or longer term rates had been moving higher because GDP was |
| 1:25.1 | being revised up. And frankly, growth expectations were coming in ahead of expectations |
| 1:28.8 | and and those are good things. That's not necessarily a real bad reason to have long-term interest |
| 1:34.6 | rates go up. But that's sort of decoupled a little at this point. I really do think part of it |
| 1:39.1 | is because of deficit spending, interest expense moving higher and I'll sort of go into some of these |
| 1:45.9 | factors. I wrote about it or talked about it on Wednesday last week, or sorry, Thursday, |
| 1:51.3 | and I know David spoke a little bit about it on Monday, so I don't want to go over it too much. |
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