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Bob Carey
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  US Economy and Credit Markets Ended Aug 16, 2019
Posted Under: Weekly Market Commentary

 
Thursday of last week witnessed the 30-year Treasury yield fall below 2% for the first time ever and the U.S. two-year bond had a higher yield than the U.S. ten-year bond for the first time since before the last recession. By the end of Friday though, the 30-year had regained a 2% yield and the 10-year yielded more than the 2-year. The yield curve is currently very flat as investors consider heightened trade tensions, a pending potential Brexit and a very long running economic expansion. U.S. Treasury yields are still positive but $15 trillion of global debt is negative-yielding. While rates have plunged to historic lows the Tuesday Consumer Price Index reading indicated higher for July and is up 1.8% from one year ago. This is not far off the Federal Reserve's 2% stated inflation target. Gold has soared in 2019 and is currently above $1,500/oz since starting the year at $1,282.49/oz and is regarded as a safe-haven asset like Treasuries. Also soaring in 2019 have been money market fund balances which have risen to a nearly 10-year high according to the Investment Company Institute. Last Thursday's economic data releases were mixed as July retail sales were shown increasing by 0.7% but industrial production declined 0.2%. Treasuries fell on Friday as German officials indicated that Germany would deficit spend should a recession hit the country. This is in contrast with its commitment to run a zero-deficit budget. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Wednesday: August 16 MBA Mortgage Applications (N/A, 21.7%) and July Existing Home Sales (5.40M, 5.27M); Thursday: August 17 Initial Jobless Claims (216K, 220K), August preliminary Markit US Manufacturing PMI (50.5, 50.4) and July Leading Index (0.2%, -0.3%); Friday: July New Home Sales (645K, 646K).
Posted on Monday, August 19, 2019 @ 8:07 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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