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