With Helene gone, but much of the clean up still to be done, the Sunshine State is now waiting for Hurricane Milton.
Milton is set to go northeast and go through the center of Florida. Let’s hope that Florida gets buttoned up in advance of the storm.
For those not in hurricane prep mode but instead listening to the “talking heads” about rates going down because of the FED cutting rates, you should probably think again, and that’s what we want to briefly look at today.
Since the FED has cut rates, the 10-year treasury has gone nowhere but up. Why is that you might ask? That is the market looking into the future to tell us about the economy. What it’s saying is that the economy will likely avoid a recession and get better from here.
Case in point, the latest jobs report.
That’s quite a big number for one month, but I would guess that you will see revisions to that number in the months to come.
Finally, the 2-year/10-year has finally “uninverted,” meaning that the 10-year rate is now higher than the 2-year treasury. This is a normal posture, after a very extended period of short-term rates being above long-term rates, as illustrated in the chart below.
The ‘market’ is saying that rates will be higher for longer. If we don’t get much of a slowdown in the economy, there is a good chance that rates will stay higher, and that inflation will come back. It depends in large part on the policies put in place by the next President. Stay tuned…
That’s it for this week. Short and sweet. If you have questions, please reach out and we are happy to have a conversation. If you are in Florida or living in the wake of Helene, our thoughts and prayers are with you!