Dow fell 65, advancers ahead of decliners by about 2-1 & NAZ edged up 15.  The MLP index rebounded 2+ to the 245s & the REIT index was roughly even in the depressed 337s.  Junk bond funds fluctuated & Treasuries saw a little selling with yields roughly flattish (more below).   Oil jumped 2+ to the 92s after a fall in US crude inventories & gold dropped 18 to 1901.

AMJ (Alerian MLP Index tracking fund)

The federal gov is facing a potential gov shutdown that could begin this weekend barring action by Congress & if it occurs, rating agency Moody's & the US credit rating could be negatively impacted.  Moody's cited past brinksmanship over the debt limit as well as a dysfunctional budgeting process in Congress as weaknesses compared to other countries that hold Aaa ratings, which is the agency's highest rating tier.  The report emphasized a lack of medium-term fiscal planning, demonstrated by Congress routinely failing to approve an annual budget, as well as limited flexibility due to high spending on mandatory entitlement programs & rising borrowing costs.  "A shutdown would be credit negative for the U.S. sovereign," the team of sovereign risk analysts led by Moody's Investors Service senior VP William Foster wrote.  "While government debt service payments would not be impacted and a short-lived shutdown would be unlikely to disrupt the economy, it would underscore the weakness of U.S. institutional and governance strength relative to other Aaa-rated sovereigns that we have highlighted in recent years."  "In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability," Moody's noted.  The analysts went on to say that "debt affordability is by far the most indicator we use in assessing the sovereign’s overall fiscal strength, due to the U.S.’ preeminent global reserve currency status and capacity to sustainably carry higher levels of debt than most countries."  The yield on the 10-year Treasury note rose as high as 4.548% on Mon, its highest level in 15 years.  Higher interest rates mean that the gov will incur higher costs from servicing the $33T national debt.  In Aug, the Congressional Budget Office noted that interest payments on the national debt rose by $149B compared to a year ago because of higher interest rates.  "At this stage, Congress’ consistent inability to agree on annual budgets and pass appropriations funding suggests that it is unlikely that successive government will be able to implement fiscal measures that will materially slow the expected decline in debt affordability," Moody's wrote.  Moody's currently rates the US gov "Aaa" with a stable outlook, which is the highest level of creditworthiness it assigns to borrowers in its rating process.  It's the last major rating agency to keep the US at its highest credit tier after its 2 peers downgraded the federal gov's credit rating during past fiscal standoffs.

Moody's warns of how government shutdown could affect US credit ratings

Consumer confidence fell again in Sep as Americans Expressed Greater Concern that the economy could be headed for a recession.  Consumer confidence fell again in Sep as Americans expressed greater concern that the economy could be headed for a recession.  Confidence remains well below a post-pandemic peak of 128.9 in Jun 2021, as consumers continue to grapple with high inflation, rising interest rates & recession fears.  The Expectations Index indicating consumers' short-term optimism for the economy also fell for a 2nd straight month in Sep, dropping to 73.7 from 83.3 in Aug.  Historically, when the index drops below 80, it signals a recession within the next 12 months, the think tank said.  The proportion of respondents who said a recession is "somewhat" or "very likely" rose in Sep, after declining in Aug.  "Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular," Conference Board chief economist Dana Peterson said.  "Consumers also expressed concerns about the political situation and higher interest rates," Peterson continued.  "The decline in consumer confidence was evident across all age groups, and notably among consumers with household incomes of $50,000 or more."  The findings also pointed to signs of rising concerns about current household finances.  The share of consumers who said they were in a "good" situation fell & the proportion citing "bad" conditions increased.

US consumer confidence drops for second straight month, recession fears rise

Treasury yields were little changed, with the yield on the 10-year Treasury coming down from the fresh 15-year high it hit yesterday.  The 10-year Treasury yield was little changed at 4.556%.  It had risen as high as 4.566% yesterday, its highest level since 2007.  kliThe 2-year Treasury  yield edged slightly higher, adding 1 basis point to 5.087%.  Yields & prices have an inverted relationship & 1 basis point equals 0.01%.   The Commerce Dept reported that orders for durable goods rose 0.2% in Aug, topping the 0.5% decline expected.  Investors considered the state of the economy as various key data points missed forecasts yesterday.  Both Aug's new home sales & Sep's consumer confidence index came in below estimates.  That comes as the Federal Reserve suggested last week that interest rates would go higher still & remain elevated for longer, prompting concerns among investors about what it could mean for the economy.  Elsewhere, concerns continued over a potential US gov shutdown, which could begin as early as Oct 1 unless Congress agrees on a deal to fund the federal gov before then.  A shutdown could negatively affect the US' credit rating.  Moody's rating agency warned earlier this week, while Wells Fargo noted that it could lead the dollar index to decline.  Pres Biden yesterday called on Congress to resolve the issue.

10-year Treasury yield pulls back from more than 15-year high

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