Daily Market Color October 27, 2021Equities Close at Record Highs as Corporate Earnings Continue to Beat Estimates US equities rise to all-time highs, long-term rates decline as corporate earnings continue in earnest. Treasury yields and swap rates took a breather and a backseat to equity markets today, which saw both the S&P 500 and DJIA hit all-time highs on the back of strong corporate earnings. UPS and GE were the main highlights while Facebook declined after failing to meet revenue forecasts. The 10-year Treasury yield would ultimately close 2 bps lower at 1.61% while shorter maturities were largely unchanged. Tomorrow, the market will get the latest look at durable goods orders for the month of September (currently expected to decline by 1.1%) and continued earnings results from several dozen members of the S&P 500. Consumer confidence rebounded in October, partially due to waning COVID-19 fears. After a soft third quarter, the Conference Board’s consumer confidence report indicates that consumer sentiment has bounced back in October even as inflation expectations have increased. Buying plans for large expenses, such as homes, autos, and major appliances, rose in October, which bodes well before the holiday spending season begins. Consumer inflation expectations increased to 7.0% for the next twelve months, up from 6.5% in September. Homes prices continued to be elevated in August, but have started to decelerate. The Federal Housing Financing Agency (FHFA) House Price Index grew at 1.0% month-over-month in August, the 4th consecutive month that growth has declined. While price growth has decelerated in recent months, year-over-year home prices in August were still at an elevated 18.5%.
