
Weekly Market Review September 13, 2023
While segments of the U.S. economy are showing signs of stress, such as the real estate market, on the whole the economy continues to defy gravity. Case-in-point, the ISM Services Index jumped to 54.5% last week (any value over 50% indicates expansion), delivering the eighth straight month of gains in the service sector and crushing economist's expectations of 52.5%. The U.S. consumer continues to spend on services despite high interest rates, growing debt levels, and depleted savings. (Source: MarketWatch) The Treasury yield curve has been inverted since July 2022. Historically, yield curve inversions have coincided with eight of the past ten recessions, yet the heavily anticipated 2023 recession has yet to arrive. Since July of this year, when the spread on 2-year and 10-year Treasuries reached a level not seen since 1981 (-1.08%), the yield curve has been steepening. This is welcome news, as stronger-than-expected economic growth data has driven longer-term yields higher. However, the yield curve remains inverted as 2-year Treasuries are yielding 4.98% while 10-year Treasuries offered 4.26% as of Friday's close. (Source: The Wall Street Journal)