.jpg "Taking a ‘Peak’ at Rates Photo")
The past week finished with a strong risk-on rally. The spark that ignited the rally seemed to be the Treasury refunding announcement on Wednesday and its plans to offer less duration than markets expected.1 The 10-year Treasury subsequently rallied from almost 5.00% to 4.66% on Thursday. Friday’s Goldilocks non-farm payrolls number added to the rate rally as the 10-year Treasury moved to 4.57%. On top of the move lower in rates, there was another bullish technical for risk assets and high yield in particular as Ford Motor Company was upgraded back to investment grade, removing approximately $50 billion in bonds from high-yield indices.2
The week ahead is light on economic releases, so the risk-on narrative could continue this week.3 The next major economic release will likely be October’s consumer price index (CPI) on November 14. There are several Federal Reserve officials expected to speak this week and investors can decide if rates have seen their peak. Friday delivers the University of Michigan consumer sentiment and inflation expectations surveys. Earnings season continued last week but is winding down for calendar year reports, which should allow for markets to further digest results and expectations for next year. Today’s focus will be on the last few earnings reports, China’s trade numbers (Monday night) and the Reserve Bank of Australia’s rate decision (also Monday night).4
Sources:
1U.S. Department of the Treasury – Quarterly Refunding Statement of Assistant Secretary for Financial Markets Josh Frost; 11/1/23
2Yahoo Finance – Ford’s Return to Investment Grade Solidifies Era of Rising Stars; 11/1/23
3MarketWatch – U.S. Economic Calendar; as of 11/6/23
4CMC Markets – APAC Week Ahead: Bottoming Out?; 11/6/23
< Go to Monday Morning Perspectives
This blog post is for informational use only. The views expressed are those of the author(s), and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client. Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.
Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice. The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete. Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements. Actual results may differ significantly. Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.
Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.
High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.
All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.
