Financial Focus
October 30, 2026 

      GOOD MORNING!     The European Central Bank (ECB) joining the Fed in holding steady on rates sparked a global bond rally.  It leaked over to the corporate market where a new $25 billion Microsoft debt offering saw $115 billion of interest.  There’s too much money.  M2 money supply posted a new record high in September and was 5.7% higher than a year ago.  Even after Thursday data revealed that the economy was on solid footing, jobless claims remaining low and suggesting that the unemployment rate will remain stable at historically low level in the near term, Treasuries held on to their price gains on safe haven flows as stocks headed south on the 97th anniversary of the ‘Black Tuesday’ meltdown that led to a depression.  Post-market reports from Amazon and Intel further punished stocks after the close and boosted Treasury prices in a safe haven trade.  The first estimate of the 3rd quarter GDP increased to a slightly higher-than-expected 3.4% quarterly annualized rate from 2.2% in the 2nd quarter.  The increase was attributed to consumer spending, business investment and government spending.  But everything was not good news.  Amid affordability issues, consumer spending lost some momentum in September.  Consumers tapped the brakes as energy and borrowing cost rose, plus spending outpaced income, causing the savings rate to soften.  Plus deflating spending by the higher PCE Deflators (3.6% y/y for headline and 3.1% y/y for core) real spending was flat in September.  With the economy warm, the labor market stable, the Fed will need to focus on hot inflation. 
     

     The safe haven trade continues to compress the Treasury yield curve as investors seek shelter from falling AI-related tech companies who aren’t getting payoff for their investing/spending.  The Bank of Japan joined the Fed and the European Central Bank in punting a rate hike until next month or December, maybe.  The price of oil is up again this morning on more attacks on tankers.  There will be some Fed speakers today and the 3rd quarter’s Employment Cost Index (ECI).  Trick or Treat.