US Economy and Credit Markets Ended May 17, 2019

Bob Carey
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US Economy and Credit Markets Ended May 17, 2019

Posted Under: Weekly Market Commentary

Treasury prices were up over the course of the week as trade tensions between the United States and China led investors to seek the perceived safety of Treasuries. On Monday, Chinese state-controlled newspaper editorials suggested that China was unwilling to agree to President Trump's terms and the Trump administration announced they would place a 25% tariff on the remaining $300 billion of untaxed goods. China retaliated by saying they would place tariffs on $60 billion of U.S. imports. However, President Trump confirmed that he planned to meet with Chinese President Xi at the G-20 summit and said that they could still reach a deal within the coming weeks. On Thursday, Treasury Secretary Steven Mnuchin said he would fly to Beijing to resume talks, but this optimism was countered by Trump signing an executive order that would allow the federal government to ban U.S. companies from buying telecom equipment from "foreign adversaries," which is directed at Chinese telecom giant Huawei in the 5G industry. In Europe, Italy's prime minister said they could use some fiscal strategies to increase employment, which renewed concerns that Italy's deficit to GDP level would hit the 3% fiscal ceiling imposed by the EU. The market implied probability of a Fed rate cut by the end of the year increased from 59% to 75% over the course of the week. However, strong economic data in the U.S., including better than expected housing starts, employment numbers and sentiment, dampened demand for Treasuries. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Tuesday: April Existing Home Sales (5.35m, 5.21m); Wednesday: May 17 MBA Mortgage Applications (n/a, -0.6%); Thursday: May 18 Initial Jobless Claims (215k, 212k). May Prelim. Markit US Manufacturing PMI (52.7, 52.6), April New Home Sales (675k, 692k); Friday: April Prelim. Durable Goods Orders (-2.0%, 2.6%).

Posted on Monday, May 20, 2019 @ 8:23 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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