More signs of a slowdown More signs of a slowdown\images\insights\article\mmdt-weekly-Small.jpg November 22 2023 November 27 2023

More signs of a slowdown

Weekly Bond Commentary

Published November 27 2023

In a thankfully holiday-shortened week, markets treaded water. Both stock and bond prices were biased slightly higher, though on slowing trading volume. 

Data pointed to further slowing. The index of leading economic indicators for October again turned down, as it has since the Federal Reserve started raising its key federal funds rate in early 2022. In addition, the Chicago Fed national activity index was sharply below expectations in October, due primarily to production-related and employment indicators.

The Fed released the minutes from its Nov. 1 FOMC meeting last week. To no one’s surprise, participants agreed they would proceed carefully and consider raising rates absent sufficient progress toward their inflation objective. Upside risks to inflation remain, but they noted consumers in the low-to-moderate income categories are increasingly coming under pressure due to high prices for food and other essentials. In short, they are in no hurry to ease policy.

Consumer confidence in November fell from October’s level, according to the University of Michigan sentiment survey. More favorable current assessments and expectations of personal finances were offset by worsening expectations of future business conditions. Troubling for the Fed, year-ahead inflation expectations increased from 4.2% in October to 4.5% in November, despite consumers taking note of falling gasoline prices and the continuing slowdown in inflation more broadly. Respondents upgraded views of their finances, but indicated they remain concerned about employment prospects in the year ahead. 

Tags Markets/Economy . Fixed Income .

Views are as of the date above and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector.

The Chicago Fed National Activity Index is a gauge the level of economic activity in the United States.

The Conference Board's Composite Index of Leading Economic Indicators is published monthly and is used to predict the direction of the economy's movements in the months to come.

The University of Michigan Consumer Sentiment Index is a measure of consumer confidence based on a monthly telephone survey by the University of Michigan that gathers information on consumer expectations regarding the overall economy.

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