Dow crawled up 14 in choppy trading, decliners over advancers better than 3-2 & NAZ declined 40. The MLP index added + to the 247s & the REIT index fell 3+ to the 335s. Junk bond funds slid lower & Treasuries saw selling, raising yields (more below). Oil was fractionally higher in the 83s & gold inched up 1 to 1939.
AMJ (Alerian MLP Index tracking fund)
The consumer took a spending break ahead of the holiday season, with Oct retail sales, excluding autos & gas, falling by 0.08%, & core retail, which also removes restaurants, declining by 0.03%, according to the new CNBC/NRF Retail Monitor. The new Retail Monitor is a joint product of CNBC & the National Retail Federation based on data from Affinity Solutions, a leading consumer purchase insights company. The data is sourced from more than 9B annual credit & debit card transactions collected & anonymized by Affinity & accounting for more than $500B in sales. The cards are issued by more than 1400 financial institutions. The data differs from the Census Bureau’s retail sales report as it is the result of actual consumer purchases, while the Census relies on survey data. The gov data is frequently revised as additional survey data becomes available. The CNBC/NRF Retail Monitor is not revised as it’s calculated from actual transactions during the month. It is, however, seasonally adjusted, using the same program employed by Census. “The CNBC/NRF Retail Monitor will modernize how retail sales are tracked and measured, and Affinity Solutions’ vast dataset of how, what and where the consumer is spending will identify how key demographics and channels are performing for the industry generally and for specific retail sectors,″ said NRF Pres & CEO Matthew Shay. “Our audience, investors and executives alike, will now be armed with dynamic insights that go beyond headline numbers to show emerging trends and critical detail,” CNBC Senior VP of Business News Dan Colarusso said. The Oct data shows a cooling of consumer spending, in line with the consensus forecasts. Year over year, overall retail & core retail sales are both up 2.6%. The Oct data showed weakness in gas station sales, electronics & appliances, & furniture & home stores. There was strength in sporting goods & hobby stores & nonstore retails, or internet sales, along with health & personal care.
Consumer spending fell in October, according to new CNBC/NRF Retail Monitor tracking card transactions
The US credit rating outlook was lowered from "stable" to "negative" this week by Moody's Investors Services as another gov shutdown looms. "Continued political polarization within U.S. Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability," Moody's said. It added, "In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability." Reps in the House are expected to try to avoid a shutdown by releasing a temporary spending measure Sat, as newly elected House Speaker Mike Johnson continues to negotiate with members before federal funding runs out on Fri. "While the statement by Moody’s maintains the United States’ AAA rating, we disagree with the shift to a negative outlook," Deputy Treasury Secretary Wally Adeyemo said. "The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset." White House spokesperson Karine Jean-Pierre called it "yet another consequence of congressional Republican extremism and dysfunction." While Moody's kept the US' AAA credit rating, the 2 other major credit rating agencies S&P & Fitch have been lowered it to AA+, which Fitch did in Aug. S&P lowered its rating in 2011. The deficit jumped from $1.38T to $1.7T in the budget year that ended Sep 30.
US credit rating outlook lowered to 'negative' by Moody's as shutdown looms
Treasury yields rose, as investors considered the state of the economy after a cut to the US outlook from Moody's. The yield on the 10-year Treasury was up more than 6 basis points at 4.692% & the 2-year Treasury yield was last trading at 5.079% after adding nearly 2 basis points. Yields & prices move in opposite directions & 1 basis point equals 0.01%. Moody’s Investors Services lowered its US credit rating outlook from stable to negative, citing fiscal deficits & political division as key factors. This comes amid a resurging threat of a US gov shutdown. The gov is funded thru to Nov 17, but lawmakers are divided over a financing bill past that deadline. Meanwhile, several key data points that could inform the Federal Reserve's upcoming monetary policy plans are expected this week. This includes the Oct consumer price index & the Oct producer price index, which will be published on Tues & Wed. This comes after Fed Chair Jerome Powell last week said that inflation is still too high & reiterated the central bank's commitment to bring it back down to the 2% target range. Progress towards this has been made, Powell noted, but the Fed is “not confident” its current monetary policy stance is restrictive enough to achieve the goal & there is still “a long way to go” in the process.
Treasury yields rise as traders assess economic backdrop following Moody’s U.S. outlook cut
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