The Week in Markets - Situation in Israel unlikely to impact financial markets

The situation in Israel is fluid, but so far, the terrorist attacks of October 7 have not escalated into a regional conflict. The United States government wants to avoid high oil prices, especially with an election looming next year. The 10-year treasury yield has fallen from 4.8% prior to the attacks to 4.6% now. On Capitol Hill, the Republicans who control the House want slimmed down individual bills, the Democrats who control the Senate want a big omnibus bill. The latter means more federal government debt. The market may be sending the government a message that more debt means higher treasury yields. Since 1950, more than half of the S&P 500 index’s returns have come in Q4. We see this year as repeating the average, and look for a year end rally.