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Bob Carey
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  US Economy and Credit Markets Ended Oct. 8, 2021
Posted Under: Weekly Market Commentary

 
Treasury yields rose significantly over the course of the week on growing concern for inflation, a debt ceiling resolution and disappointing job data. Early in the week a rise in oil prices added to the fears of inflation, especially as energy prices in the United Kingdom rose significantly over supply chain disruptions. It is viewed as an indicator for higher yields when energy prices rise as it erodes the fixed value of a bond. Oil rose 4.57% over the course of the week and finished at its highest price since November of 2014. On Thursday, yields climbed significantly as lawmakers in Washington reached an agreement to extend the debt ceiling though early December and avert a government default. The equity markets rallied Thursday for the news as investors took a more risk-on approach and reduced the demand for Treasurys. Yields continue to rise slightly on Friday, despite only 194k new jobs being created compared to expert consensus expectations of 500k. The unemployment rate dropped to 4.8% from 5.2% but the labor force participation rate dropped to 61.6% from 61.7%. The week jobs report has led investors to believe it is less likely the Federal Reserve tapers bond purchases, which is still expected to occur by the end of this year. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Wednesday: October 8 MBA Mortgage Applications (n/a, -6.9%), September CPI MoM (0.3%, 0.3%); Thursday: October 9 Initial Jobless Claims (325k, 326k), September PPI Final Demand MoM (0.6%, 0.7%); Friday: October Empire Manufacturing (25.0, 34.3), Retail Sales Advance MoM (-0.2%, 0.7%), October Prelim. U. of Mich. Sentiment (73.5, 72.8).
Posted on Monday, October 11, 2021 @ 8:10 AM • Post Link Share: 
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