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Bob Carey
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  US Economy and Credit Markets Week Ended April 4, 2014
Posted Under: Weekly Market Commentary
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The Treasury yield curve experienced a twist over the course of the week as yields rose for 10-year and 30-year maturities but dropped for shorter duration maturities. The twist began on Monday as yields dropped across the board, but much more for short and intermediate duration Treasury notes. This was the result of Federal Reserve Chairwoman Janet Yellen appearing to backtrack earlier comments on how quickly the Fed would hike interest rates, as she said the central bank will maintain "extraordinary economic support for some time to come." Treasury yields then rose for all maturities on Tuesday, except to a much larger extent for 10-year and 30-year durations, on optimism in the Equity markets for a spring rebound in economic data. This trend continued on Wednesday after a positive private-sector jobs report gave optimism about the coming payrolls report. Automatic Data Processing, Inc. data showed the fastest hiring pace in three months, which gave support to the theory that the economy will pick up with warmer weather. However, on Friday, the payrolls report showed slow improvement as the unemployment rate stayed unchanged at 6.7% and equities tumbled. This caused yields dropped significantly on Friday to close the week only slightly higher. Intermediate durations dropped more than short or long term maturities on Friday also. Major economic reports (and related consensus forecasts) for the upcoming week include: Wednesday: April 4 MBA Mortgages Applications, February Wholesale Inventories (0.5% MoM); Thursday: April 5 Initial Jobless Claims (320K); Friday: March Producer Price Index Final Demand (0.1% MoM, 1.2% YoY), University of Michigan Confidence (81.5).

Posted on Monday, April 7, 2014 @ 7:45 AM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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