Reinhart Week in Review by Madison Investments 11.17.2023

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INFLATION

The Consumer Price Index (CPI) was unchanged in October and rose 3.2% year-over-year. Core CPI, excluding food and energy, increased 0.2% and 4.0% over the same time periods. The Producer Price Index (PPI) fell 0.5% while core PPI was unchanged. Over the past year PPI has risen 1.3% while core PPI grew by 2.4%.

Our Take: Inflation readings were softer than anticipated, leading market participants to believe that the Fed will be on hold for the foreseeable future. The “higher for longer” Fed stance remains as core service inflation is still proving to be difficult to tame.

RETAIL SALES

Retail sales fell 0.1% in October. The retail sales control group, which feeds GDP calculations, rose 0.2%.

Our Take: Retail sales outperformed in October, declining less than expected. Additionally, September sales were revised higher. Despite a better-than-expected report, early Q4 spending was soft. It appears that consumers were either taking a break from strong third quarter spending or that spending is slowing down.

MUNICIPALS

Many U.S. states’ tax revenues have been declining recently. September marked the 14th month in a row of decreased total state tax revenue measured on an inflation-adjusted basis according to a report from the Urban Institute.

Our Take: Overall, slowing economic growth along with a decline in the stock market has led to lower tax revenue. States may be forced to raise taxes, cut spending, or tap into rainy-day funds in order to meet their budget needs.

About Reinhart Fixed Income
“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

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