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Bob Carey
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  US Economy and Credit Markets Ended August 18, 2017
Posted Under: Weekly Market Commentary

Treasuries sold off early in the week as geopolitical concerns abated and retail sales came in better than expected. Specifically, retail sales grew 0.6% in July and 4.2% versus a year ago. The selloff reversed on Wednesday when the Federal Open Market Committee released the minutes from its July meeting. The minutes showed that the Committee is split over the timing of the next rate increase. Some members argued against a rate increase until the recent softness in inflation proves temporary, while others cautioned that a delay "could result in an overshooting of the Committee's inflation objective that would likely be costly to reverse." Fed Chairwoman Janet Yellen told the Senate Banking Committee in July "It probably remains prudent to continue on a gradual path of rate increases." Members agreed that the Fed should begin to reduce the size of its balance sheet "relatively soon." On Thursday, declines in major U.S. stock indexes increased demand for haven assets like U.S. government bonds, sending yields lower. The market also questioned the Trump administration's ability to pass through its fiscal agenda after two CEO councils were disbanded on Wednesday, putting further pressure on yields. This week, top policy makers, including Fed Chair Janet Yellen and European Central Bank President Mario Draghi, will meet in Jackson Hole, Wyoming for an annual economic symposium. Major economic reports (related consensus forecasts; prior data) for the upcoming week include: Wednesday: August 18 MBA Mortgage Applications and August preliminary Markit US Manufacturing PMI (53.4, 53.3); Thursday: August 19 Initial Jobless Claims (236K, 232K) and July Existing Home Sales (5.56M, 5.52M); Friday: July preliminary Durable Goods Orders (-6.0%, 6.4%).
Posted on Monday, August 21, 2017 @ 8:58 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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