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Bob Carey
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  US Economy and Credit Markets Ended Oct. 29, 2021
Posted Under: Weekly Market Commentary
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Yield curve flattening picked up steam last week as central banks prepare to taper easy-money policies implemented at the onset of the pandemic. Longer-term US Treasury rates fell on lower growth expectations while shorter-term rates held relatively flat in expectation of the Fed beginning to raise rates next year. The gap between the 5-year US Treasury yield and 30-year yield narrowed to its smallest level since March 2020. The U.S. economy grew at an annual rate of 2.0% in the third quarter, which was slower than expected, as supply chain issues weighed on growth. It was the slowest pace since the recovery began in the third quarter of 2020. Consumer spending growth also slowed in September, growing 0.6% compared to 1% in August. The Fed meets on Tuesday and Wednesday this week and is widely expected to keep rates unchanged, before raising rates in 2022. The Fed is also expected to announce the tapering of its monthly asset purchases, which it signaled in September. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: October ISM Manufacturing (60.3, 61.1), October Final Markit US Manufacturing PMI (59.2, 59.2), September Construction Spending MoM (0.5%, 0.0%); Wednesday: November 3 FOMC Rate Decision – Upper Bound (0.25%, 0.25%), October 29 MBA Mortgage Applications (N/A, 0.3%), September Final Durable Goods Orders (N/A, -0.4%), October ADP Employment Change (400k, 568k), September Factor Orders (-0.2%, 1.2%); Thursday: October 30 Initial Jobless Claims (278k, 281k), September Trade Balance (-$75.0b, -$73.3b); Friday: October Change in Nonfarm Payrolls (400k, 194k), October Unemployment Rate (4.7%, 4.8%).
Posted on Monday, November 1, 2021 @ 8:20 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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