Consumer spending remains resilient despite rate hikes

  • Treasury yields hold just above two-month trough
  • Record online Black Friday sales suggest strong consumer spending
  • Market pricing in unchanged interest rates for December and January meetings
  • Treasury auctions to provide insight into demand
  • Economists closely watching inflation data for monetary policy implications

Bond yields were little changed on Monday following record online Black Friday spending, indicating that the U.S. consumer is still spending despite the Federal Reserve’s rate hike campaign. The yield on the 2-year Treasury remained steady at 4.955%, while the yield on the 10-year Treasury rose slightly to 4.480%. The 30-year Treasury yield was barely changed at 4.954%. The Treasury market returned from the Thanksgiving break with yields holding just above recent two-month lows. The benchmark 10-year U.S. government bond yield closed Friday’s session down 39 basis points for the month, signaling hopes of slower inflation and potential interest rate cuts next year. However, record online Black Friday sales suggest that household spending remains strong, making it challenging for the central bank to push inflation down to its target of 2%. Market expectations indicate a 97% probability of unchanged interest rates at the December meeting and an 89% chance at the January meeting. Analysts are closely watching the personal consumption expenditure index for October, which will be released on Thursday, for further insights into inflation trends and their impact on monetary policy decisions. The Treasury will also hold auctions for 2-year notes and 5-year bonds, providing an indication of demand. Overall, while the current economic backdrop does not signify a complete resolution of inflation concerns, policymakers must prepare for potential interest rate hikes if inflation persists and strategize for rate cuts if risks to the labor market increase.

Public Companies: Treasury (BX:TMUBMUSD02Y), Treasury (BX:TMUBMUSD10Y), Treasury (BX:TMUBMUSD30Y)
Private Companies:
Key People: Stephen Innes (Managing Partner at SPI Asset Management), Jim Reid (Strategist at Deutsche Bank)

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Factuality Level: 7
Justification: The article provides information about bond yields and the impact of Black Friday spending on the U.S. consumer. It includes data on Treasury yields and market expectations for interest rates. The article also quotes analysts’ opinions on inflation and monetary policy. Overall, the article presents factual information with some analysis and opinions from experts.

Noise Level: 3
Justification: The article provides information on bond yields and the impact of Black Friday spending on the U.S. consumer. However, it contains a lot of unnecessary information, such as the mention of text-to-speech technology and the advertisement. The article also lacks scientific rigor and intellectual honesty, as it does not provide evidence or data to support its claims. Overall, the article is filled with noise and filler content.

Financial Relevance: Yes
Financial Markets Impacted: Bond market

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the impact of Black Friday spending on bond yields, indicating the relevance to financial markets. However, there is no mention of any extreme event.

Reported publicly: www.marketwatch.com