Before beginning, we would first like to extend our heartfelt thoughts and sympathies to all of those affected by the recent tragedy in Las Vegas. Equity markets ended the third quarter on a positive note as optimism about the economy and fiscal stimulus in the form of tax cuts kept stocks well bid. The fourth quarter gets off to a quick start this week with some key U.S. economic data.
This week, I will be watching closely for the Institute of Supply Management's (ISM) Manufacturing Index and the September Employment report. The ISM Manufacturing gauge should show continued strength in the economy. The market expectation is for a reading of 58, however I think we may see a reading closer to 60 as the weaker dollar supports domestic manufacturing. Any reading over 50 represents expansion in the manufacturing sector.
The much watched Employment report will be closely scrutinized as the recent hurricanes likely impacted hiring for the month. The expectation is for 75,000 new jobs in September, well below the last six month average. The unemployment rate is expected to remain unchanged at 4.4%. It is hard to predict the impact of the hurricanes, although other gauges of employment suggest continued strength.
As for the markets for the remainder of the year, I expect stocks to remain well bid as third quarter earnings have the potential to exceed expectations. In this environment, I expect bonds to come under pressure and yields to make new highs for the year. As it has been for the entire year, events in Washington and geopolitical risks continue to be a wildcard. With this in mind, investors should continue to stay focused on fundamentals.
This blog post is for informational use only. The views expressed are those of the author, Dave O’Malley, and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client. Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.
Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice. The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete. Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements. Actual results may differ significantly. Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.
Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.
High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.
All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.