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Bob Carey
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  US Economy and Credit Markets Ended June 16, 2017
Posted Under: Weekly Market Commentary
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Treasuries rose during the week after it was announced on Wednesday that the Consumer Price Index (CPI) fell 0.1% in May. For the trailing twelve months, consumer prices rose 1.9%, the third straight month of declining annual gains. Excluding food and energy, prices were up 1.7%, which is the lowest level in two years. The sign of slowing inflation sent yields lower as investors expect less purchasing power to be eroded from their fixed-dollar investments. Notably, the yield on the U.S. 10-year Treasury note fell to its lowest level since November 10th in the days immediately following the U.S. presidential election. Later on Wednesday, the Federal Reserve raised the target range for the federal funds rate to 1.00% to 1.25%, which was widely expected. On Thursday, Treasuries gave back some of Wednesday's gains as investors expect the Fed to raise rates once more in 2017, despite the recent softness in inflation. At odds is the fact that inflation has slowed despite low unemployment, which could make it more difficult for the Fed to raise rates later this year. However, the Fed still expects the economy to evolve in a manner that will warrant gradual rate increases. In regards to its inflation forecast, the Fed expects inflation to remain below its 2% target in the short term, but to eventually stabilize around its target in the medium term. Major economic reports (related consensus forecasts; prior data) for the upcoming week include Wednesday: June 16 MBA Mortgage Applications (--, 2.8%), May Existing Home Sales (5.55M, 5.57M); Thursday: June 17 Initial Jobless Claims (240K, 237K), May Leading Index (0.4%, 0.3%); Friday: May New Home Sales (591K, 569K), June Markit US Manufacturing PMI (52.9, 52.7).

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 19, 2017 @ 8:23 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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