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Bob Carey
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  US Economy and Credit Markets Ended November 9, 2018
Posted Under: Weekly Market Commentary

 
The Federal Open Market Committee left rates unchanged last week, as expected, saying in its statement "that the labor market has continued to strengthen and that economic activity has been rising at a strong rate." Household spending increases have also been strong recently, according to the Fed, while business fixed investment has slowed from its robust pace in the first half of 2018. The yield on the U.S. 10-year Treasury hit a 7-year high on Thursday following the statement, while the Fed is still widely expected to raise rates for the fourth time this year at its December meeting. U.S. government bond prices were little changed after a volatile session on Wednesday following the midterm elections that went as expected. Meanwhile, demand for the Treasury's auction of 30-year bonds on Wednesday was the weakest for a 30-year bond auction since February 2009, measured by the number of bids relative to the amount debt sold, or the bid-to-cover ratio. The weak demand was partially attributed to the increasing supply of debt brought on by the expanding budget deficit and the Fed's reduction of its balance sheet, as it allows $30 billion in Treasurys to mature each month without being reinvested. The Producer Price Index rose 0.6% in October over the prior month, easily topping the 0.2% expected increase. The month-over-month increase was the largest since September 2012. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Wednesday: October CPI MoM (0.3%, 0.1%), November 9 MBA Mortgage Applications (N/A, -4.0%); Thursday: November 10 Initial Jobless Claims (214k, 214k), October Retail Sales Advance MoM (0.5%, 0.1%), November Empire Manufacturing (20.0, 21.1); Friday: October Industrial Production MoM (0.2%, 0.3%).
Posted on Monday, November 12, 2018 @ 8:08 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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