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Bob Carey
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  US Economy and Credit Markets Ended July 13, 2018
Posted Under: Broader Stock Market
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United States Treasury bond prices slid early in the week, pushing Treasury yields higher. Auctions for short-dated Treasury notes were weak on Tuesday. With the Federal Reserve gradually raising rates, investors have been wary of buying short-dated government paper which tracks the benchmark rate. Treasury yields dropped in the middle of the week while investors purchased U.S. government notes as the market reacted to the White House planning to place a 10% tariff on an additional $200 billion of Chinese goods. Thursday, the two-year Treasury note yield touched its highest level since July of 2008, because of consumer inflation hitting a six-year high, indicating rising price pressures. However, yields were contained due to inflation-adjusted hourly earnings having shown little movement over recent periods. The lack of a large sell-off indicates that investors discounted price pressures accelerating throughout the economy. The week ended with Treasury yields falling on Friday as the yield curve continues to flatten as the gap between the two-year note and 10-year note narrowed by roughly 5 bps. The yield curve continues to flatten as senior Fed officials remain hawkish and the demand for U.S. government paper increases. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Monday: July Empire Manufacturing (21.0, 25.0), June Retail Sales Advance MoM (0.5%, 0.8%); Tuesday: June Industrial Production MoM (0.5%, -0.1%); Wednesday: July 13 MBA Mortgage Applications (N/A, 2.5%), June Housing Starts (1320k, 1350k); Thursday: July 14 Initial Jobless Claims (221k, 214k), June Leading Index (0.5%, 0.2%).
Posted on Monday, July 16, 2018 @ 7:57 AM • Post Link Share: 
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