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Bob Carey
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  US Economy and Credit Markets Ended Oct. 22, 2021
Posted Under: Weekly Market Commentary
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Each spot rate on the U.S. Treasury Curve rose last week as yields marched higher in the face of inflation and the looming Fed taper. The fixed income market's confidence in transitory inflation is weakening after investors digested an equity earnings week filled with supply chain issues and higher input costs. The 5-Year breakeven rate – a gauge of implied 5-year inflation expectations – surged to its highest level since being introduced in 2002. The index touched 3% on Friday before retreating to 2.90% at week end. On Friday, Fed Chairman Jerome Powell spoke at the Bank for International Settlements conference for the final time before the highly anticipated Fed policy meeting on November 2 & 3 and reaffirmed the Fed's plan to begin asset purchase tapering this year. He also signaled that supply chain issues and high inflation will likely persist into 2022 after proving stickier than Fed policymakers originally expected. Jobless claims unexpectedly fell and reached a pandemic low, signaling a reluctance to lay off employees while hiring remains challenged. October preliminary Markit US Manufacturing PMI fell further than expected to 59.2 which is its lowest reading since March of this year. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Tuesday: September New Home Sales (758k, 740k), October Conference Board Consumer Confidence Index (108.5, 109.3); Wednesday: October 22 MBA Mortgage Applications (n/a, -6.3%), September Wholesale Inventories MoM (1.0%, 1.2%), September Durable Goods Orders (-1.0%, 1.8%); Thursday: October 23 Initial Jobless Claims (290k, unch.), Q3 GDP Annualized QoQ (2.8%, 6.7%); Friday: September Personal Income (-0.2%, 0.2%), September Personal Spending (0.6%, 0.8%), October MNI Chicago PMI (64.0, 64.7), October University of Michigan Sentiment (71.4, unch.).
Posted on Monday, October 25, 2021 @ 8:13 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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