Historically, October has been the most volatile month for the markets. With the 2024 Presidential Election looming this year, October is shaping to be a rocky ride for investors. While the market anticipates a rate cut next month, there is the feeling that our economy is “still full of inflation concerns.”
We could see the 10T move to a 4.20% and perhaps 4.25% due to numerous reasons, but with “election jitters” present, I suspect we will see yields dance around the 4.00-4.20% mark for a while.
Conversely, Chicago Mayor Brandon Johnson is facing a major challenge as the city’s school board abruptly resigned. The city is already dealing with a nearly $1 billion deficit for next year, the largest since the pandemic, and a surprise shortfall this year after the school system refused to pay a pension bill. Johnson’s plan to borrow money was rejected, and city officials criticized him. On Monday, Johnson proposed new board members but faced opposition from business leaders, worried that the turmoil could hurt the city’s ability to attract businesses and residents. Despite the pushback, Johnson defended his decisions and called for more state support, emphasizing that he won’t allow school budget cuts. This issue will be something to watch. As many of you know, Chicago’s BOEs have been the “thorn in the side” of the city and continue to cause issues. We are surprised, however, that the 5.00% Chicago BOEs callable now have yet to be called.
Bottom Line:
We are moving in the right direction but at a slower pace than some anticipated. The market dips are not just challenges but also opportunities to pick up value before further rate cuts or tax changes in the coming year. We think yields will taper off in November and start on a downward path in December. Overall, cash is good to have; however, rates on Money Markets will likely continue to fall over the next few months.
Looking forward to speaking with you to help clarify any of the above.
David Loesch
[email protected]
www.drlgroup.net
605-B Park Grove
Katy, TX 77450
866.664.4040 (toll-free)
281.398.8600 (direct)
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