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Bob Carey
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  US Economy and Credit Markets Week Ended January 9, 2015
Posted Under: Weekly Market Commentary
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The Treasury's 10-year yield dipped below 2% for the first full week of trading in 2015 as global uncertainty and Friday's slow wage growth data supported demand for U.S. Treasuries. Contrary to the beginning of year analyst expectations, 2014 was the best annual Treasury bond performance in three years. The Federal Reserve remitted $98.7 billion in profits to the Treasury in 2014 reflecting higher interest earnings and its larger, $4 Trillion balance sheet. Crude oil continued to languish below $50/barrel and as supply continues to outstrip demand the odds of a quick rally in the price of Crude Oil become increasingly long. The Trade Balance was reported on Wednesday and while exports fell, imports fell more and the balance was -$39B vs. an expected November imbalance of -$42B. Friday saw a rash of important reports which were received with mixed feelings but ultimately the Hourly Earnings decreasing caused sentiment to turn negative. Friday's December Change in Nonfarm Payrolls was positive with 252K added to payrolls vs. and anticipated 240K. The unemployment rate came in at 5.6% vs. an expected 5.7%, the underemployment Rate was 11.2% and the labor force participation rate was 62.7%. While these were all positive, markets were surprised to see wages fall as hourly earnings MoM were down .2% vs an expected rise of 2% and the hourly earnings YoY were up 1.7% vs. an expected increase of 2.2%. Change in Major economic reports (and related consensus forecasts) for the upcoming week include: Wednesday: Prior Week MBA Mortgage Applications and December Retail Sales Advance MoM (-.1%); Thursday: PPI Final December Demand MoM (-.4%) and Prior Week Initial Jobless Claims (292K, -2K); Friday: December CPI MoM (-.4%, -.1%) and December Industrial Production MoM (0%, -1.3%).

Posted on Monday, January 12, 2015 @ 8:24 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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