Weekly Market Update October 11, 2023

Israel has declared war on Hamas after a surprise attack on Saturday was carried out by Hamas militants from the Gaza strip, killing at least 700 Israeli soldiers and civilians. The attacks flew under the radar of Israeli intelligence, leaving Israel and their allies scrambling for answers as the coordinated attacks pierced through major checkpoints between Israel and the Gaza strip. Israel responded Sunday by killing over 400 in Gaza, with Israeli Prime Minister Benjamin Netanyahu saying his country is "embarking on a long and difficult war". It was reported that Iran helped Hamas plot the attacks on Israel. (Source: The Wall Street Journal, Associated Press)

Longer-term Treasury rates continued to rise as the 10-year Treasury hit 4.88% last week. While rosier economic data had been pushing up yields since July, multiple factors are now driving U.S. rates higher, including a deteriorating fiscal picture, rising debt issuance, hedge fund activity in the futures market, and investors demanding a higher 'term premium'. The bear steepening event has shrunk the magnitude of the yield curve inversion from 110 basis points in July to just 30 basis points to end the week. (Source: Reuters)

This week, we get an update on September inflation as the Producer Price Index (PPI) and the Consumer Price Index (CPI) are reported. Third quarter earnings season officially kicks off later this week.

Blueprint Numbers

AMERICAN SPENDERS - Who is fueling the U.S. spending that is supporting the U.S. economy despite elevated interest rates? American's 65 and older. The cohort now makes up 17.7% of the U.S. population, the highest on record going back to the 1920's and up significantly from 13% in 2010. This group accounted for 22% of the spending last year, the highest share since the record began in 1972. (Source: The Wall Street Journal)

UPSIDE JOB SURPRISE - The U.S. added 336,000 in September, the largest gain in eight months and nearly double economists' expectations. Additionally, previously job growth estimates were revised upwards. The September unemployment rate was reported at 3.8%. (Source: John Hancock)

EARNINGS SEASON EXPECTATIONS - According to analysts surveyed by Factset, earnings from S&P 500 companies are expected to decrease 0.3%. If overall earnings decrease for the third quarter, it would be the fourth consecutive quarter of shrinking earnings. (Source: Factset)

MARATHON RECORD - Kelvin Kiptum, 23, broke his own marathon record at the Chicago Marathon over the weekend. He finished the marathon in two hours, zero minutes and 35 seconds and is the frontrunner to be the first to ever break the two-hour mark. Kiptum earned $100,000 for the victory plus a $50,000 course record bonus. (Source: Runner's World)

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