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Bob Carey
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  US Economy and Credit Markets Ended October 5, 2018
Posted Under: Weekly Market Commentary

On Wednesday of last week private payrolls expanded more than anticipated and the ISM Non-Manufacturing Index rose to 61.6 for the month of September which outpaced an expected reading of 58. All major measures of activity were higher in the ISM Non-Manufacturing Index and because of the strong economic data bond yields rose meaningfully. The 10-year U.S. Treasury note reached levels not recorded since 2011. After flattening for an extended period, last week registered a sharp steepening of the yield curve. According to the current implied future probabilities, markets are pricing in one more rate hike for 2018 and two for next year. However, given the strength of U.S. economic data last week's yield spike could imply investors believe the Federal Reserve may have to take a more aggressive pace to raising interest rates. Crude Oil has also been rising over the past month as global demand remains robust and supply is not increasing as much as was anticipated. Last week ended with Friday's nonfarm payrolls increasing in September but lagging consensus expectations. The unemployment rate did decline to 3.7% for the month and represents a multi-decade low. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Wednesday: October 5 MBA Mortgage Applications (N/A, 0.0%), September PPI Final Demand (0.2%, -0.1%) and August final Wholesale Inventories (0.8%, 0.8%); Thursday: October 6 Initial Jobless Claims (210K, 207K); Friday: October preliminary University of Michigan Sentiment (100.6, 100.1).
Posted on Monday, October 8, 2018 @ 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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