{"id":12789,"date":"2023-10-30T15:44:15","date_gmt":"2023-10-30T15:44:15","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=12789"},"modified":"2024-01-10T17:16:51","modified_gmt":"2024-01-10T17:16:51","slug":"resilient-u-s-economy-bonds-hit-5-heating-bills-may-drop-this-winter","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/resilient-u-s-economy-bonds-hit-5-heating-bills-may-drop-this-winter\/","title":{"rendered":"Resilient U.S. Economy, Bonds Hit 5%, Heating Bills May Drop This Winter"},"content":{"rendered":"\n

In today’s Steady Investor, we examine the important factors affecting the market and what might lie ahead, including:<\/p>\n\n\n\n

\u2022 PMI shows signs of economic resilience
\u2022 10-year U.S. treasury bonds reach 5%
\u2022 China implements stimulus
\u2022 Natural gas surplus expected to reduce heating bills<\/p>\n\n\n\n

Purchasing Manager\u2019s Indices Show Further Signs of Economic Resilience<\/strong> \u2013 Manufacturing and services PMIs offer a useful glimpse into U.S. economic activity each month. For unfamiliar investors, S&P Global and Institute for Supply Management (ISM) are the two major companies that report PMI data. Their methodologies and reported figures are generally different each month, but both tend to provide the same insights about services and manufacturing activity, i.e., whether we\u2019re seeing expansion or contraction. This week, S&P Global released October PMI data for U.S. manufacturing and services, and both gauges showed that economic activity improved in the month. S&P Global indicated that manufacturing hit 50 in October, while U.S. services PMI reached 50.9 \u2013 a three-month high. A high-level takeaway here is that the economy performed better in October than in late summer, confirming again that the U.S. economy is doing better-than-expected. Among the top reasons the U.S. economy is likely performing better than expected: strong hiring continues to fuel strong spending.1<\/sup><\/p>\n\n\n\n

Tips On How to Survive Market Volatility<\/a><\/span><\/strong><\/p>\n\n\n\n

Bull or Bear market?<\/strong> The stock market’s most undeniable feature is its continuous shift between bullish and bearish cycles. Each cycle brings a different outcome, but some investors still question how to manage their investments during uncertain times like these.<\/p>\n\n\n\n

To help you understand market downturns and steps you can take to protect your assets during the next bear market, you\u2019re invited to get our free guide – Everything You Need to Know About Bear Markets.2<\/sup><\/em><\/p>\n\n\n\n

If you have $500,000 or more to invest, get this helpful guide today. It walks through the history and types of bear markets, how investors typically react to extreme volatility, and what we can learn from the history of bear markets and pandemics.<\/p>\n\n\n\n

Download – Everything You Need to Know About Bear Markets2<\/sup><\/em><\/a><\/span><\/strong><\/p>\n\n\n\n

10-Year U.S. Treasury Bonds Reach 5% for First Time 2007<\/strong> \u2013 The big headline this week once again involved the 10-year U.S. Treasury bond, whose yield touched 5% for the first time in 16 years. Interestingly enough, demand for the higher yield put upward pressure on bond prices, which pushed the yield back down below 5% before the end of the trading day. We have written before in this space about better-than-expected economic growth being a driver of higher interest rates, as investors re-price a higher-for-longer rate outcome. Because interest rates determine many borrowing costs, from mortgage rates, credit cards, auto loans, business loans, and other government debt, upward pressure risks slowing economic activity going forward. We don\u2019t dispute this possibility \u2013 but as seen on the chart below, even with the strong upward move recently, long-duration interest rates are still below their average in the previous 50+ years. Over that time, the economy has gone through some ups and downs, but they\u2019ve mostly been ups.3<\/sup><\/p>\n\n\n\n

\"\"
Source: Federal Reserve Bank of St. Louis4<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n

China Implements Stimulus to Bolster Economy, But Is It Enough?<\/strong> China\u2019s economic challenges are well-documented, and range from weak consumer spending, slow growth in exports, and a beleaguered property market. What is less well-documented are the government\u2019s efforts to prop up economic growth, largely because there haven\u2019t been many material stimulus packages put in place. That may be changing. For the first time in more than 10 years, China issued additional sovereign bonds and raised its budget-deficit target in somewhat of an \u2018emergency legislative session.\u2019 The government agreed to issue 1 trillion yuan, or $137 billion, in additional sovereign debt, which will provide additional capital to use for stimulus measures \u2013 though it is unclear at present what these stimulus measures will be. The government has yet to engage in any type of direct transfer fiscal stimulus and instead has engaged in interest rate cuts, lowering mortgage costs, and other less robust measures. Investors may read the new bond issuance as a signal that the government is growing wary of economic weakness, but also that the mindset about addressing the issues may have changed as well.5<\/sup><\/p>\n\n\n\n

Looking Forward to Lower Bills This Winter<\/strong> \u2013 Winter weather is coming, which means Americans will spend more time indoors. Fortunately, the bill for heating homes should be lower this year than last, with strong natural gas stockpiles and expectations for a warmer-than-normal winter both keeping downward pressure on natural gas prices. There are about 60 million U.S. households that use natural gas to heat homes, and the Energy Information Administration expects winter bills to be about $600 on average, which would be 21% lower than last year. Higher utility bills crimped household budgets last year and resulted in higher input costs for businesses \u2013 which contributed to inflation. Those pressures should abate this winter.6<\/sup><\/p>\n\n\n\n

Prepare for Market Downturns<\/strong> \u2013 We\u2019ve all witnessed how quickly the stock market can change. That\u2019s why it is important for investors to understand how bear and bull markets work.<\/p>\n\n\n\n

To gain insight into market downturns and steps you can take to protect your assets during the next bear market, you\u2019re invited to get our free guide – Everything You Need to Know About Bear Markets.7<\/sup><\/em><\/p>\n\n\n\n

If you have $500,000 or more to invest, get this helpful guide today. It walks through the history and types of bear markets, how investors typically react to extreme volatility, and what we can learn from the history of bear markets and pandemics.<\/p>\n","protected":false},"excerpt":{"rendered":"

PMI data shows economy performing better than expected, China implements economic stimulus, natural gas surplus could lower heating bills for millions. <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-12789","post","type-post","status-publish","format-standard","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12789","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=12789"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12789\/revisions"}],"predecessor-version":[{"id":12792,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12789\/revisions\/12792"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=12789"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=12789"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=12789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}