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Bob Carey
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  US Economy and Credit Markets Ended March 31, 2017
Posted Under: Weekly Market Commentary

 
Last week began with investors doubting President Trump's ability to advance tax reforms and other pro-growth fiscal policies after failing to repeal and replace the Affordable Care Act. As stocks sold off, investors poured assets into safe-haven Treasuries causing the benchmark 10-yr yield to reach the lowest level in a month. The University of Michigan consumer sentiment survey fell from 97.6 to 96.9 on Tuesday further propping up Treasury prices. A reversal in the direction of yields began Wednesday in response to oil futures hitting a three week high, ultimately rising more than 5% on the week. Fourth quarter GDP indicated the economy expanded at a 2.1% annual pace, continuing jobless claims fell by 3,000, and personal income rose 0.4% in February. February's YoY PCE deflator hit 2.1% as expected. This marks the first time since 2012 that the Fed's preferred measure of inflation climbed above its 2% long-term target. Core prices, excluding energy, were also up. Economic data continues to support the consensus expectation for at least two more Fed rate hikes this year. The market interpreted Fed President William Dudley's anticipation of two more rate hikes as dovish on Friday, pulling yields back down. His comments followed other Fed President's suggestions that there could be three or four more hikes this year. Major economic reports (and related consensus forecasts and prior data) for the upcoming week include Monday: March ISM Manufacturing (57.2, 57.7), March ISM Prices Paid (66.0, 68.0), February Construction Spending (1.0%, -1.0%); Tuesday: February Trade Balance ($-44.6B), February Factory Orders (0.9%, 1.2%), February Durable Goods Orders Final (1.7%, 1.7%), Wednesday: March 31 MBA Mortgage Applications, March ADP Employment Change (189k, 298k); Thursday: April 1 Initial Jobless Claims (250k, 258k); Friday: March Change in Nonfarm Payrolls (175k, 235k), and the March Unemployment Rate (4.7%).
Posted on Monday, April 3, 2017 @ 8:16 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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