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Bob Carey
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  US Economy and Credit Markets Ended Sept. 23, 2016
Posted Under: Weekly Market Commentary

 
Treasury prices rose over the course of the week as the Federal Reserve decided to keep interest rates at 0.25 during the September meeting. Treasury prices stayed steady the first two days of the week as home-builder confidence reached its highest reading in a decade on Monday and investors awaited the Fed decision. When the Fed announced on Wednesday that rates would remain the same, Treasuries rose modestly. However, 3- and 6-month Treasuries rose significantly as investors believed that the Fed's policy statement signaled that an interest rate hike was likely before the end of the year. This caused a flattening of the yield curve, which is usually a sign that investors believe that interest rates are about to rise. The Fed's dot-plot implied one rate hike in 2016 and two in 2017. This drop in yields occurred despite the Bank of Japan announcing earlier in the day a 10-year interest rate target to fight deflation. Treasuries continued to climb on Thursday despite lower than expected Initial Jobless Claims due to poor existing home sales and slower factory activity. Friday's manufacturing data was also weak and Treasuries remained steady despite the Boston Fed President saying he and two other dissenters wanted to raise rates. Major economic reports (and related consensus forecasts) for the upcoming week include: Monday: August New Home Sales (600,000), September Dallas Fed Manf. Activity (-3.0); Tuesday: September Prelim. Markit US Services PMI (51.2), September Consumer Confidence Index (98.7); Wednesday: September 23 MBA Mortgage Applications, August Prelim. Durable Goods Orders (-1.4%); Thursday: August Premlim. Wholesale Inventories (0.0% MoM), 2Q GDP Annualized (2.3% QoQ), 2Q Personal Consumption (4.4%), September 24 Initial Jobless Claims (260,000), August Pending Home Sales (0.0% MoM); Friday: August Personal Income (0.2%), August Personal Spending (0.1%), September Chicago Purchasing Manager (52.0), September Final U. Of Michigan Sentiment (90.0).
Posted on Monday, September 26, 2016 @ 8:29 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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