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Bob Carey
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  US Economy and Credit Markets Ended April 13, 2017
Posted Under: Weekly Market Commentary

 
A holiday-shortened week marked by heightened geopolitical concerns saw continued demand for government bonds, which is a reversal of their post-election sell-off. After the election, Treasuries declined on higher expectations for economic growth and inflation, but recent geopolitical headlines have caused investors to reevaluate their expectations and renewed demand for safe assets like government bonds. Notably, the yield on the U.S. 10-year Treasury note has fallen from has high of 2.6% in March to below 2.3%, currently. Of primary concern was escalating tensions between the U.S. and Russia and the U.S and North Korea. Meanwhile, on Wednesday, President Trump said in an interview that he supports a "low-interest rate policy," which sent Treasuries higher. The Labor Department also said on Wednesday that import prices fell 0.2% in March, helping to stem inflation expectations and keep yields lower. Treasuries sold off to begin Thursday but rallied to end the holiday-shorted week after the U.S. used its largest nonnuclear bomb against ISIS, exacerbating investors' geopolitical concerns and increasing demand for government bonds. Elsewhere, the upcoming French presidential election has also contributed to investors' concerns, causing the spread between French government bond yields and German government bond yields to widen. Major economic reports (and related consensus forecasts and prior data) for the upcoming week include Monday: April Empire Manufacturing (15); Tuesday: March Industrial Production (0.5% MoM); Wednesday: April 14 MBA Mortgage Applications; Thursday: April 15 Initial Jobless Claims, March Leading Index (0.2%), April Philadelphia Fed Business Outlook (25).
Posted on Monday, April 17, 2017 @ 8:20 AM • Post Link Share: 
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