Morning Report: Debt ceiling reprieve.

Vital Statistics:

S&P futures4,39135.2
Oil (WTI)77.02-0.49
10 year government bond yield 1.55%
30 year fixed rate mortgage 3.20%

Stocks are higher this morning after yesterday’s rebound rally. Bonds and MBS are down.

It looks like we have a deal on the debt ceiling to move the deadline to December. “Two months seems like plenty of time and (we) think the debt ceiling would be raised through reconciliation by then and do not expect to experience the past week come December,” NatWest analysts wrote in a research note on Wednesday.

I don’t think the markets ever really thought the US would default on its debt – this is something more like theater for the DC crowd. I think the issue here is that the reconciliation process can only be used a limited number of times, and if Democrats punch their reconciliation ticket on the debt ceiling, they won’t have one for their $3.5 trillion spending plan. Mitch McConnell also knows that the closer we get to the 2022 elections the harder it will be to pass major legislation.

There were 17,895 job cuts in September, according to outplacement firm Challenger, Gray and Christmas. For the third quarter, there were 52.560 cuts, which was the lowest number since 1997.

“Companies are in hiring and retention mode, and job seekers have a lot of power to make demands at the moment,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc. “We know there are millions of open positions, but many employers are having trouble keeping up with their applicants, taking too long to reach out, not making offers fast enough, or losing out to more attractive offers,” he added.

Health care is experiencing an acute shortage as employees are burned out from the never-ending workload. Hiring is increasing as the big retailers staff up for seasonal demand.

Separately, initial jobless claims fell to 326,000 last week. Below is a chart of the last year’s initial claims. While we have made some big improvements, initial claims are still 50% higher than they were pre-COVID

High home prices are weighing on homebuyer sentiment, according to the Fannie Mae Homebuyer Sentiment Index. The most notable statistic was the percentage of people who thought it was a good time to buy, which fell from 32% to 28%. The percentage of those who thought it was a bad time to buy increased from 63% to 66%. Respondents are also getting less bullish on housing prices going forward, however they are quite sanguine about their job prospects, with 82% saying they are not concerned about losing their job.


Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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