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Bob Carey
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  US Economy and Credit Markets Ended July 15, 2016
Posted Under: Weekly Market Commentary
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U.S. Treasury yields increased last week as marginal bond yields drove investors to riskier markets for income. Japan's monetary stimulus and the Bank of England's signal of monetary stimulus later this summer also encouraged investors to lighten up on bond holdings. On Tuesday, yields on the 10 year note suffered the largest two-day increase since December 2015, signaling buying fatigue after bond yields fell to record lows toward the end of last week. U.S. government bonds strengthened on Wednesday as a $12 billion auction drew the strongest demand ever recorded from foreign investors. Investors have been piling into government debt as yields from developed countries hit historic lows after the U.K.'s decision to leave the European union. Initial jobless claims remained unchanged last week, adding further support that the May payroll-stall was an anomaly as the pace of layoffs remains relatively low. U.S. PPI beat consensus expectations, rising for a third consecutive month in June, driven by a rebound in energy and food prices. U.S. Government bonds pulled back on Friday as upbeat consumer spending and industrial production weakened demand for safe haven bonds. Sales excluding autos increased 0.7% in June, beating the consensus expected 0.4%. Excluding both autos and gas, sales are up 4.6% versus a year ago. The increase in sales in June was led by building materials, non-store retailers (internet and mail orders), and gas stations. Major economic reports (and related consensus forecasts) for the upcoming week include: Tuesday: June Housing Starts (1170k); Wednesday: July 15th MBA Mortgage Applications; Thursday: July 16th Initial Jobless Claims (270k), June Existing Home Sales (5.47m), June Leading Index (0.2%); Friday: July Markit US Manufacturing PMI (52.0).
Posted on Monday, July 18, 2016 @ 8:53 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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