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Bob Carey
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  US Economy and Credit Markets Ended Feb. 3, 2017
Posted Under: Weekly Market Commentary
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The Treasury curve steepened last week, with short term rates falling on decreased expectations for a March rate hike. The FOMC met last week and left the Fed Funds rate unchanged at 0.5%-0.75%, as expected. The accompanying statement reiterated their expectation for moderate economic growth with a slightly more hawkish tone. ADP reported an increase of 246k jobs in January, much higher than the survey of 168k. On Friday, the Labor Department also reported a strong jobs report for the month of January, reporting payrolls increased by 227k vs the median forecast of 180k, representing steady job market growth. The participation rate increased to a four-month high of 62.9 percent. Initial Jobless Claims fell more than expected from 260k to 246k. However, the unemployment rate increased from 4.7% to 4.8%. Average Hourly Earnings increased 0.1% MoM and 2.5% YoY. Personal income increased 0.3% in December, which was less than the expected 0.4% consensus, while Personal Spending met expectations of 0.5%. The Fed's favorite measure of inflation, the PCE deflator, rose 0.2% in December. The January ISM Manufacturing Index rose to 56.0 beating the consensus of 55.0 (levels above 50 indicate expansion and below 50 signal contraction). Major economic reports (and related consensus forecasts) for the upcoming week include: Tuesday: U.S. Trade Balance (-$45.0B, -$0.2B); Wednesday: weekly change in MBA Mortgage Applications; Thursday: monthly change in Wholesale Inventories (1.0%, unch.), prior week Initial Jobless Claims (249k, +3k); and Friday: University of Michigan Consumer Sentiment Index (97.9, +1.0).
Posted on Monday, February 6, 2017 @ 8:59 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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