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  US Economy and Credit Markets Ended June 9, 2017
Posted Under: Weekly Market Commentary

 
Treasury prices dropped moderately over the course of the week on surprisingly steady trading despite several geopolitical and economic events. Former FBI Director James Comey testified in front of the Senate Intelligence Committee on Thursday and did not implicate that President Donald Trump had any direct connections to Russia, nor did he assert that the President tried to impede the investigation. This caused demand for Treasuries to drop as fears of turmoil were lessened and investors took a more risk-on approach. Later on Thursday, the United Kingdom had a general election where Theresa May's Tories came up short of projections and a majority in parliament. However, May is reportedly working with the Northern Ireland's Democratic Unionist Party to secure a bloc slightly above the 326-seat threshold needed for a majority. The outcome is being seen as optimistic and soft for the Brexit, which also contributed to a risk-on trade from investors. The European Central Bank also left interest rates unchanged and removed a reference to rates possibly moving lower.  Now that these three potential risk-causing events have passed, demand for the perceived safety of Treasuries from investors is lower. The Federal Reserve will decide on interest rates next week and the market implied probability of a rate hike is 95.7%. Oil also dropped 4% over week after an unexpected rise in U.S. crude inventory levels. Major economic reports (related consensus forecasts; prior data) for the upcoming week include Tuesday: May PPI Final Demand (0.0%, 0.5% MoM; 2.3%, 2.5% YoY); Wednesday: June 9 MBA Mortgage Applications (--, 7.1%), May CPI (0.0%, 0.2% MoM; 2.0%, 2.2% YoY), May Retail Sales Advance (0.1%, 0.4% MoM), FOMC Rate Decision (Upper 1.25%, Lower 1.00%); Thursday: June Empire Manufacturing (5.0, -1.0), June 10 Initial Jobless Claims (240k, 245k), June Philadelphia Fed Business Outlook (25.0, 38.8); Friday: May Housing Starts (1.22M, 1.172M), June Prelim U. of Michigan Sentiment (97.1, 97.1).

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA and the Internal Revenue Code. First Trust has no knowledge of and has not been provided any information regarding any investor. Financial advisors must determine whether particular investments are appropriate for their clients. First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks independently and is responsible for exercising independent judgment with respect to its retirement plan clients.
Posted on Monday, June 12, 2017 @ 9:56 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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The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
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