- I suspect jobless claims will be lower over the upcoming weeks as initial estimates for October are 280M, not far from the average of 218M in 2019. As the Delta variant abates, a lift to consumer confidence following three straight declines could power returns to work in October and November.
- The city of Chicago approved a $16.7B budget for 2022 to help recover from losses sustained during the pandemic through measures including one of the country's most extensive guaranteed basic income programs. The plan will target property tax increases and call on federal aid. Like many cities, Chicago's credit quality should improve with their improved finances.
- The flattening of the yield curve will get a bit more fuel as US pension funds will need to rebalance this month by moving $5B into the fixed income market and out of equities. Wells Fargo strategists say that the shift will occur because the pensions' funding ratios have improved given rising equities and higher yields, reducing the systems' liabilities' discounted value. According to Wells Fargo, this will be the most significant move since a $23B in March.
- Insured bond issues have increased at the highest rate since 2009, with $31.5B in municipal bonds out of $379B total, 8.29%.
- For hospitals, the pandemic is persisting and worsening with the nurse shortage. This shortage is driving up hospital costs and putting pressure on their profits and bonds ratings. DRL only trades the insured paper as it relates to this asset class.
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