Bond Yields Push Higher as Deficit Concerns Grow Ahead of Election \u2013 <\/strong>Many investors are expecting budget deficits and the national debt to go up in the next four years\u2014no matter who wins the White House. According to several financial media stories this week, rising deficit expectations have pushed yields on long-duration U.S. Treasuries higher over the past few weeks, as seen in the chart below.1<\/sup><\/p>\n\n\n\n 2-Year U.S. Treasury Bond Yields (Blue Line) and 10-Year U.S. Treasury Bond Yields (Red Line)<\/em><\/strong><\/p>\n\n\n\n Independent analysis shows that Trump\u2019s campaign proposals could expand deficits by $7.5 trillion over the next decade, while Harris\u2019s were closer to $3.5 trillion. The takeaway is the same, however: the U.S. government will need to issue increasing amounts of debt to finance rising spending, which raises concerns about the supply of bonds. When traders get concerned about bond supply, long-term yields tend to rise as they are more a reflection of future expectations for inflation and growth\u2014not a reflection of expected Fed policy. These are all valid arguments and concerns, in our view. But it\u2019s also worth considering that bond yields are still well within normal historical ranges, and yields fell from June to October\u2014a time when both candidates\u2019 policies were already being discussed. We\u2019d also remind investors that candidates\u2019 campaign promises are not foregone conclusions, as many ultimately do not materialize or are watered down substantially on their way to becoming law. <\/p>\n\n\n\n Stock Market Returns in an Election Year<\/a><\/u><\/strong><\/p>\n\n\n\n Historical data shows that stocks tend to perform well in election years, and our free guide, Stock Market Returns in an Election Year3<\/sup><\/a><\/u><\/em><\/strong>, explores this trend in detail.<\/p>\n\n\n\n You\u2019ll learn:<\/p>\n\n\n\n If you have $500,000 or more, fill out the form to get your free copy of this special report today\u2014and invest smarter during this election year!<\/p>\n\n\n\n Get Our FREE Guide: Stock Market Returns in an Election Year<\/em> <\/u><\/a><\/strong>3<\/a><\/sup><\/p>\n\n\n\n Q3 Earnings Season is Underway\u2014Here\u2019s What We Know So Far \u2013 <\/strong>Through the end of last week, we\u2019ve seen third-quarter results from 182 S&P 500 members, or 36.4% of the index\u2019s total membership. Total earnings for these 182 companies are down -2.1% from the same period last year on +4.5% higher revenues, with 75.8% of the companies beating EPS estimates and 58.8% beating revenue estimates. In the charts below, we can see earnings beat % and revenue beat % in a historical context, which we would characterize as average.4<\/sup><\/p>\n\n\n\n Looking ahead to the rest of the Q3 reporting period, when we combine the results that have come out with estimates for the still-to-come companies, we expect total earnings for the S&P 500 index to rise +1.5% from the same period last year on +5% higher revenues. The chart below shows the Q3 earnings and revenue growth pace in the context of where growth has been in the preceding four quarters and what is expected in the coming three quarters. As many CEOs have noted in earnings calls, there\u2019s an expectation that Q3 marks the trough for earnings growth.<\/p>\n\n\n\n Consumer Confidence Surges in October, While Job Openings Fall \u2013 <\/strong>U.S. consumers\u2019 moods appear to have brightened in October. According to the Conference Board\u2019s consumer confidence index, consumers experienced the biggest one-month acceleration in confidence since March 2021, with the index rising 11% to a reading of 138. The Conference Board\u2019s index of future conditions, which asks consumers how they feel about prospects going forward, increased nearly 8% to 89.1. Generally speaking, a future conditions reading under 80 signals recession conditions. This data comes as the Bureau of Labor Statistics reported that job openings fell to 7.44 million in September, which is roughly equal to the number of available workers.5<\/sup><\/p>\n\n\n\n Worried About Your Investments This Election Year? <\/strong>Investing during an election cycle means putting political views aside to focus on objective, data-driven decisions.<\/p>\n\n\n\n![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/11\/chart1-1024x349.png\")
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