It was a thin week for economic data. Both new and existing home sales were reported lower in September, although the trends are generally higher. Durable goods orders fell 1.1% in September, reflecting the strike at GM and ongoing problems at Boeing. Ex-transportation, orders slipped 0.3%, with mixed results across industries.

Boris Johnson reached a Brexit agreement with the European Union, but the prime minister failed to get that through Parliament, leading to another delay. Some progress was reported in trade talks with China. Earnings reports were mixed.

Next week, the economic calendar is as busy as it gets. While some components are still missing, real GDP is likely to have risen at a 1.6-1.8% annual rate in the advance estimate for 3Q19, reflecting moderate growth in consumer spending and further weakness in business fixed investment. Monthly figures on consumer spending are expected to show a loss of momentum ending the quarter. Some 46,000 striking GM workers will disappear from the nonfarm payrolls total in October (but will return when the strike is settled). Adjustments for the school year may add noise and we could see some hiring for the 2020 census, but the underlying trend in job growth is expected to slow (we need less than 100,000 per month to absorb new entrants into the workforce). Average hourly earnings are expected to pick up following no change in September (watch for revisions). The ISM Manufacturing Index should show that the factory sector remains in contraction. While Fed officials have been divided on the appropriate course of monetary policy, financial markets have largely factored in another insurance cut in short-term interest rates and the Federal Open Market Committee rarely acts against such expectations.


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Consumer Money Rates

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Fed Funds 1.80 2.16
30-year mortgage 3.70 4.94


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10-year treasury 1.66 1.84
10-year municipal (TEY) 2.09 2.23