Stock futures were little changed as traders kicked off October trading after a short-term agreement in Washington averted a government shutdown. Wall Street is contending with rising bond yields, and investors are hoping for a solid upcoming earnings season. European stocks opened lower, and solar names like SolarEdge and Enphase dropped after a downgrade. The Nasdaq-100 Index has rallied for 14 straight weeks on the first day of trading. Wells Fargo Investment Institute predicts a shopping opportunity in municipal bonds as they historically pull back in September and October but see a pop in November and December.
Stock futures are higher as investors await the release of the August payrolls report. Traders are hopeful that the report will indicate a slowdown in the economy, potentially leading the Federal Reserve to pause benchmark interest rate hikes. In other news, China's major banks have cut interest rates on yuan deposits, and South Korea and Japan both experienced contraction in their factory activity. Meanwhile, a strategist warns investors to remain cautious of a potential recession, and opportunities may arise in the municipal bond space. After-hours, database software maker MongoDB and Dell Technologies reported stronger-than-expected earnings, while Broadcom issued soft guidance. Stock futures opened little changed on Thursday night.
A financial meltdown at Legacy Park, a sports arena in Mesa, Arizona, highlights that not all municipal bonds are created equal, as the bonds used to build the park recently traded at roughly 10 cents on the dollar.
Municipal bonds are currently a favorable investment option, despite their lower yields compared to money-market funds. When considering tax benefits, the appeal of municipal bond yields increases. Additionally, it is a good time to invest in longer-term municipal bonds.
Social Security should not be the only source of retirement income. A CD ladder, municipal bonds, and a job in the gig economy are some options to explore. Laddering CDs and municipal bonds can provide consistent access to cash and avoid losing out on higher interest rates. Working in retirement offers benefits beyond just a paycheck, including social and mental health benefits.
Municipal bond issuers are becoming increasingly anxious as the deadline for raising the debt ceiling approaches. If the debt ceiling is not raised, the government may default on its debt, which could have serious consequences for the municipal bond market. Additionally, a government shutdown could also impact the market, as it did in 2013.
