US Economy and Credit Markets Ended March 20, 2020

Bob Carey
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US Economy and Credit Markets Ended March 20, 2020

Posted Under: Weekly Market Commentary

In historic fashion, last weekend the Federal Reserve fired the proverbial "bazooka" at the coronavirus. The Federal Reserve cut its benchmark interest rate to 0.00%-0.25%, the lowest since December 2015, and implemented a repurchase agreement of $700 billion worth of Treasury debt and mortgage-backed securities. The Federal Reserve Chairman Jerome Powell stated the central bank has no intention to push the benchmark interest rate below zero. Throughout the week, numerous cities and states ordered shelter-in-place orders and the Federal government has closed the borders to non-essential travel in efforts to further combat the coronavirus. In response, US Treasury bond yields were down for the week as investors favored safe haven assets fearing an economic slowdown. As for February economic data, new home sales declined for the month but still beat the consensus estimate, while existing home sales rose 6.5%, easily beating estimates. Industrial production in February rose 0.6%, beating estimates. Retail sales dipped in February by half a percent, below the consensus estimate of 0.2% growth. The dip in sales was largely due to gas stations and autos. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: February Chicago Fed National Activity Index ( n/a, -0.25); Tuesday: March Preliminary Markit Us Manufacturing PMI ( 45.0, 50.7), March Preliminary US Services PMI (44.0, 49.4), March Preliminary US Composite PMI (n/a, 49.6), February New Home Sales (750K, 764K), March Richmond Fed Manufacturing Index (-10, -2); Wednesday: March 20 MBA Mortgage Applications (n/a, -8.4%), February Preliminary Durable Goods Orders ( -1.0%, -0.2%), January FHFA House Price Index MoM (0.4%, 0.6%); Thursday: February Preliminary Wholesales Inventories MoM (n/a, -0.4%), 4Q Third GDP Annualized QoQ (2.1%, 2.1%), March 21 Initial Jobless Claims (750K, 281K), March 22 Bloomberg Consumer Comfort Index (n/a, 63.0); Friday: February Personal Income (0.4%, 0.6%), February Personal Spending (0.3%, 0.2%), March Final University of Michigan Sentiment Index (93.3, 95.9).

Posted on Monday, March 23, 2020 @ 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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