US Economy and Credit Markets Ended July 31, 2020

Bob Carey
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US Economy and Credit Markets Ended July 31, 2020

Posted Under: Weekly Market Commentary

U.S. Treasury bond yields dropped across the yield curve last week as investors digested a slew of economic data and news. The week started with positive virus-related investor sentiment raising the long end of the yield curve on news of the start of the largest vaccination study. On Wednesday, Treasury yields were mixed across the curve as the Federal Reserve reiterated the benchmark interest rate of 0.00% to 0.25% and their continued assurance to do whatever is necessary to support the economy. Treasury yields took a downward turn on Thursday as investors preferred haven assets after the jarring second quarter U.S. GDP numbers. Second quarter GDP growth came in at -32.9%, which beat the consensus expected drop of 34.5%. Though the GDP decline was less than expected, the large decline led investors to purchase Treasury bonds, and drove the U.S. 10-Year Treasury yield to its lowest since March. The week ended with Treasury yields continuing to decline, including the U.S. 2-Year Treasury yield pushing down near all-time lows. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: July Final ISM US Manufacturing PMI (51.3, 51.3), July ISM Manufacturing (53.6, 52.6), July ISM Prices Paid (52.0, 51.3), June Construction Spending MoM (1.0%, -2.1%); Tuesday: June Factory Orders (5.0%, 8.0%), June Final Durable Goods Orders (7.3%, 7.3%); Wednesday: July 31 MBA Mortgage Applications (n/a, -0.8%), July ADP Employment Change (1200k, 2369k), June Trade Balance (-$50.1b -$53.6b), July final Markit US Services PMI (49.6, 49.6), July final Markit US Composite PMI (n/a, 50.0), July ISM Services Index (55.0, 57.1); Thursday: August 1 Initial Jobless Claims (1414k, 1434k), July 25 Continuing Claims (17000k, 17018k); Friday: July Change in Nonfarm Payrolls (1520k, 4800k), Change in Manufacturing Payrolls (300k, 356k), July Unemployment Rate (10.5%, 11.1%).

Posted on Monday, August 3, 2020 @ 8:11 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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