Major stock indices all ended the week with substantial gains as third quarter earnings started with strong gains.
The International Monetary Fund slightly reduced its growth forecast for 2021 and 2022 and raised its inflation forecast.
The Federal Reserve released the minutes from their September meeting which indicated they likely will start tapering bond purchases in November and likely will complete bond purchases by the middle of next year. There is no time set to raise short term rates. At this time, many central banks have started raising rates with the U.S., the European Union and Japan holding onto current rates.
Social Security announced a 5.9% cost of living increase for 2022, the largest since 1982. Also the amount of earned income subject to Social Security Taxes will increase from $142,800 in 2021 to $147,000 in 2022.
Treasury yields were lower with the 30-year bond yield closing at 2.046% and the 10-Year note closing at 1.570%. Crude oil rose to $82.23 a barrel and natural gas fell to $5.422 per MMBTUs. The U.S. dollar index fell to 93.93 and gold rose to $1769.20 an ounce.
In the economic numbers:
- The International Monetary Fund lowered its forecast for world output from 6.0% to 5.9%. The forecast for 2022 is 4.9%. They increased their 2022 forecast consumer-price inflation in developed countries of 2.3%
- China reported:
- Exports have increased 28.1% in September from a year earlier, up from 26.0% year over year increase in August.
- Imports increased 17.6% year over year in September down from 33% in August due to a slowdown in property construction following the Evergrande illiquidity.
- Exports to the U.S. rose 30% year over year and imports rose 17%.
- The producer price index rose 10.7% in September from a year earlier, a 26-year high.
- The Commerce Department reported retail sales rose 0.7% in September. This number is not adjusted for inflation.
- The autos and auto parts category rose 0.5%. However, auto sales units fell which means the growth was due to higher auto prices and parts sales.
- Excluding autos and parts, retail sales rose 0.8%.
- Restaurants and bars sales rose 0.3%.
- Gasoline sales rose 1.8%, largely due to price increases.
- Sporting goods, music and book stores sales rose 3.7%.
- The Labor Department reported:
- The consumer price index rose 0.4% in September and 5.4% from last September. This was a slight increase from August and equal to the increases in June and July.
- Excluding volatile food and energy, consumer prices rose 0.2% in August and 4.0% from a year earlier.
- A seasonally adjusted 293,000 workers filed initial claims for unemployment in the week ending October 9th down 36,000 from a revised 329,000 the week before. This was the lowest since March of 2020.
- The 4-week moving average of claims, designed to smooth out volatility, fell 10,500 to 334,250.
- Continuing claims fell from 2.7MM to 2.6MM in the week ending October 4th.
- A broader measure of claims including extended benefits, pandemic assistance and other programs fell from 4.2MM to 3.6MM in the week ended September 25th.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
- Field production of crude oil rose from 11.3MM barrels per day to 11.4MM BPD.
- Natural gas storage rose 81BN cubic feet and is below the 5 year average at this time of year.
- Baker Hughes reported the number of active oil rigs rose 12 to 445. The number of active natural gas rigs fell to 98.
- Factset reported with 8% of S&P 500 companies reporting Q3 earnings, the blended earnings growth rate was 30.0% from a year ago.
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