US Economy and Credit Markets Ended August 28, 2020

Bob Carey
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US Economy and Credit Markets Ended August 28, 2020

Posted Under: Weekly Market Commentary

Long-term Treasury yields rose significantly over the course of the week, with short-term yields remaining flat on positive economic reports and signals from the Federal Reserve that they want to keep rates low. Yields rose moderately early in the week as pandemic fears subsided and strong housing numbers were reported. The S&P CoreLogic Case–Shiller U.S. National Home Price Index rose 4.3% and new home sales rose 13.9% in July. Durable Goods Orders also rose 11.2% compared to estimates of 7.6%. Investors took a more risk-on approach despite Consumer Confidence dropping to 84.8 in August from 91.7 in July On Thursday, yields rose moderately as the Federal Reserve said it would allow inflation to rise over the target rate of 2% before raising rates, which is different than the past policy of raising rates preemptively when inflation got near 2%. The spread between the 2-year and the 10-year Treasury yields also widened to 59 basis points, the widest in recent weeks.; U.S. and Chinese officials also confirmed they remain committed to the Phase One trade deal on Tuesday. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Tuesday: August Final Markit US Manufacturing PMI (53.6, 53.6), August ISM Manufacturing (54.5, 54.2), July Construction Spending (1.0%, -0.7%); Wednesday: August 28 MBA Mortgage Applications (n/a, -6.5%), August ADP Employment Change (900k, 167k), July Factor Orders (4.2%, 6.2%), July Final Durable Goods Orders (11.2%, 11.2%); Thursday: August 29 Initial Jobless Claims (950k, 1006k), July Trade Balance (-$52.0b, -$50.7b); Friday: August Change In Nonfarm Payrolls (1456k, 1763k), August Unemployment Rate (9.8%, 10.2%).

Posted on Monday, August 31, 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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