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Bob Carey
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  US Economy and Credit Markets Ended Jan. 20, 2017
Posted Under: Weekly Market Commentary

Treasury prices dropped moderately over the course of the week as investors speculated on Trump's policies and economic data suggested rising inflation and a more aggressive Federal Reserve. Treasuries began the week with gains on Tuesday as comments from President-elect Donald Trump on the Republicans border tax plan foreshadowed possible clashes on his policies. Investors are uncertain about which of Trump's policies will be implemented and how quickly. Treasury prices then dropped significantly on Wednesday as the Consumer Price Index rose more than expected with its highest year-over-year reading since 2011, and industrial production rose by the largest amount in two years. The Fed views improved inflation as a sign of a healthy economy and investors believe that they may increase rates a faster pace. Strong economic data was released again on Thursday including strong housing starts, lower initial jobless claims and higher a Philadelphia Fed Business Outlook, which contributed to the belief that the Fed will view the economy as strengthening. In Europe, speculation of increased inflation has led to belief that the European Central Bank may have tighter monetary policy but Mario Draghi played down this at a news conference on Thursday. Treasury prices rose slightly on Friday as Donald Trump was sworn in as President. Major economic reports (and related consensus forecasts) for the upcoming week include: Tuesday: January Preliminary Markit US Manufacturing PMI (54.5), December Existing Home Sales (5.5M); Wednesday: January 20 MBA Mortgage Applications; Thursday: December Preliminary Wholesale Inventories (0.1% MoM), January 21 Initial Jobless Claims (245,000), December New Home Sales (585,000), December Leading Index (0.5%); Friday: 4th Quarter Annualized GDP (2.2% QoQ), 4th Quarter Annualized Personal Consumption (2.5% QoQ), December Preliminary Durable Goods Orders (2.6%), January Final U. of Michigan Sentiment (98.1).
Posted on Monday, January 23, 2017 @ 8:02 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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