Economic Roller Coaster Takes Credit Spreads Back to Where They Started
Things look great in the rearview mirror, but the windshield is becoming increasingly foggy.
As we make our way through earnings season, reports have been generally in line with expectations and management teams have mostly reiterated their guidance for the year. However, the economic reports that have been released over the past few weeks have taken investors on a wild roller coaster ride.
At the beginning of last week, regional economic reports such as the Chicago PMI fell further than economists expected. But the next day, the national ISM manufacturing report significantly surpassed expectations, bolstering investor hopes that the U.S. economy was holding up despite the European slowdown. In fact, not only did ISM come in higher than expected, it rose from last month, whereas economists had been expecting a fall. On Wednesday, the ADP payroll report was significantly below consensus, tempering the high hopes for strong employment growth. Investors cheered jobless claims Thursday, which fell further and faster than anyone had expected. On Friday, however, the employment situation sapped any remaining hope from the market.
David Sekera does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.