Reinhart Week in Review by Madison Investments 12.01.2023

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INFLATION

The Personal Consumption Expenditures deflator (PCE) was unchanged in October and rose 3.0% year-over-year. Core PCE rose 0.2% and 3.5% respectively over the same time periods.

Our Take: The PCE inflation report was as expected. Inflation appears to be slowing but remains above the Fed’s 2% target. The Fed is unlikely to raise rates at their December meeting and the market still believes that rate cuts are likely as soon as mid-2024.

PERSONAL INCOME AND SPENDING

October personal income and spending both rose 0.2%

Our Take: Despite many predictions of an impending recession, the economy continues to chug along, albeit at a somewhat slower pace than in the third quarter. This is welcome news to the Fed as they continue to try and achieve a soft landing.

MUNICIPALS

Municipal issuance for 2023 has reached $337 billion, which is 3% lower than last year’s issuance for the same period. Estimates indicate that 2024 volume could range from $330 billion to $450 billion according to Bloomberg.

Our Take: Last year’s estimates for 2023 issuance called for $300 billion to $500 billion and the 2023 final issuance number will most likely land toward the lower end of that wide range. Rising rates and volatility have led many municipalities to delay or postpone planned issuance in 2023.

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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This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Although the information in this report has been obtained from sources that the firm believes to be reliable, we do not guarantee its accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the firm’s judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

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