US Economy and Credit Markets Ended August 3, 2018

Bob Carey
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US Economy and Credit Markets Ended August 3, 2018

Posted Under: Weekly Market Commentary

Long-dated U.S. Treasury yields fell on Tuesday as the Bank of Japan affirmed their accommodative monetary policy. Japan remains one of the few countries still with an aggressive monetary policy in place post the financial crisis. On Wednesday, the Federal Open Market Committee left rates unchanged, which comes as no surprise to investors. U.S. Treasury yields pushed higher as the market reacted to the Federal Open Market Committee's statement highlighting strength in the U.S. economy as well as affirming two interest rate increases will take place this year. The Bank of England increased key interest rates on Thursday. Though expected, this was only the second key rate rise in the past decade for the Bank of England. U.S. Treasury yields pulled back on Thursday as investors reacted to continued tariff tension between the U.S. and China. The week wrapped up with U.S. Treasury yields continuing to drop as the market digested a slew of economic reports. One hundred and fifty-seven thousand jobs were created in July, which is a strong number, but below estimates. The bankruptcy of Toys R Us and governments cutting education jobs over summer break are the drivers of the smaller than expected gain in jobs. The unemployment rate fell to 3.9% in July from 4.0% in June. The ISM Nonmanufacturing index came in at 55.7 for July, an 11-month low. Hourly pay rose $0.07 in July, but wage gains remain unchanged over the past 12 months. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Wednesday: August 3 MBA Mortgage Applications (N/A, -2.6%); Thursday: August 4 Initial Jobless Claims (220k, 218k), July PPI Final Demand (0.2%, 0.3%), June Final Wholesale Inventories MoM (0.0%, 0.0%); Friday: July CPI MoM (0.2%, 0.1%), July CPI YoY (3.0%, 2.9%).

Posted on Monday, August 6, 2018 @ 8:24 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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