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Bob Carey
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  US Economy and Credit Markets Ended March 3, 2017
Posted Under: Weekly Market Commentary
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Yields rose sharply across the curve last week with the yield on the benchmark Treasury 10yr note increasing 17bps. Several Fed Presidents made hawkish comments and indicated a March rate hike is on the table. Market expectations that the FOMC will raise rates in March skyrocketed from 40% to over 90% in just a few days. Data throughout the week continued to support the Fed's dual mandate of full employment and 2% inflation. Initial jobless claims fell to 223,000 on Thursday, the fewest in 44 years. The Fed's preferred measure of inflation, Personal Consumption Expenditure, rose 0.4% in January, the most for any month since 2011, inching the YoY index up to 1.9%. Fed Chairwoman Janet Yellen gave a speech Friday afternoon in Chicago and stated that growth potential looks a bit less than 2%. However, she said that if the economy evolves as expected, a rate hike at the March 15th meeting will be appropriate. The only major economic report between now and the two-day meeting is the jobs report. After her speech, the likelihood of a March rate increase rose even further, to 94%. Yellen noted uncertainty around fiscal policy after Trump's first major address to a joint session of Congress last week failed to provide details on trade, infrastructure, or tax reform. Major economic reports (and related consensus forecasts) for the upcoming week include: Monday: January Factory Orders (1.0%, -0.3%) and Durable Goods Orders (1.0%, -0.8); Tuesday: Trade Balance ($-48.0B, $-3.7); Wednesday: prior week MBA Mortgage Applications, ADP Employment Change (185,000, -61,000) and Wholesale Inventories MoM (-0.1%, unch);  Thursday: Prior week Initial Jobless Claims (239,000, +16,000); Friday: Nonfarm Payrolls (190,000, -37,000), Unemployment Rate (4.7%, -0.1%), and Average Hourly Earnings YoY (2.8%, +0.3%).
Posted on Monday, March 6, 2017 @ 8:27 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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