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Bob Carey
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  US Economy and Credit Markets Ended Oct. 15, 2021
Posted Under: Weekly Market Commentary

 
Last week yields in the middle of the US Treasury Yield curve were up, the front end remained relatively unchanged and longer-dated yields fell. Wednesday of last week the Minutes of the Federal Open Market Committee meeting dated September 21-22 were released. The Fed indicated that tapering could begin as soon as mid-November and fully anticipates it will begin before 2022. Both the Consumer and Producer Price Index were released last week and while the CPI ran ahead of expectations by 0.1%, the PPI lagged expectations by 0.1%. Regardless, CPI advanced 5.4% from the year earlier and the PPI advanced 8.6% from the year earlier, running well ahead of any available Treasury yields. The bond market seems to be pricing in the current inflation levels as transitory even with the reported inflation levels remaining relatively high. In meeting notes, the Fed commented that it observed PCE prices well above their targeted 2% rate but that they continue to anticipate this to be transitory. They expect supply pressures to partially ease as supply chain issues resolve and import prices fall. High resource utilization rates in 2022 are also expected to assist in lowering pricing pressures and in total the Fed anticipates the PCE will fall below 2% in 2022 and "edge" higher to reach 2% in 2024.  On Friday of last week retail sales were reported rising 0.7% in September led by general merchandise stores, gas stations and autos. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: September Industrial Production MoM (0.2%, 0.4%); Tuesday: September Housing Starts (1615k, unch.); Wednesday: October 15 MBA Mortgage Applications (n/a, 0.2%); Thursday: October 16 Initial Jobless Claims (303k, 293k), September Leading Index (0.4%, 0.9%) and September Existing Home Sales (6.05m, 5.88m); Friday: October preliminary Markit US Manufacturing PMI (60.5, 60.7).
Posted on Monday, October 18, 2021 @ 8:19 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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