US Economy and Credit Markets Ended Dec. 17, 2021

Bob Carey
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US Economy and Credit Markets Ended Dec. 17, 2021

Posted Under: Weekly Market Commentary

Treasury yields dropped moderately over the course of the week as the Federal Reserve announced policy expectations during their December meeting. The Fed determined it will taper monthly asset purchases more quickly than before, reducing from $60 billion a month to $30 billion. Fed officials also announced that they expect 3 rate hikes in 2022 and raised inflation forecasts for 2023 but kept their long-term projection for the fed funds rate at 2.5%. Fed Chairman Jerome Powell said that the Fed would attempt to keep elevated inflation from becoming more permanent and that it may take some time to return to higher workforce participation. This came after the Producer Price Index Final Demand increased 9.6% YoY, exceeding analyst expectations of 9.2%. Treasury yields did rise Wednesday on the Fed's announcement, but dropped for the whole week on concerns over the omicron variant and doubts that the Fed would be able to push interest rates higher. The market implied probability of a rate hike by the May 2022 meeting increased 10% on Wednesday. For the week it increased to 87% from 73%. Major economic reports (related consensus forecasts, prior data) for the upcoming holiday-shortened week include: Monday: November Leading Index (0.9%, 0.9%); Wednesday: December 17 MBA Mortgage Applications (n/a, -4.0%), 3rd Quarter (Third) Annualized GDP QoQ (2.1%, 2.1%), December Conf. Board Consumer Confidence (110.6, 109.5), November Existing Home Sales (6.56m, 6.34m); Thursday: November Personal Income (0.5%, 0.5%), November Personal Spending (0.5%, 1.3%), December 18 Initial Jobless Claims (203k, 206k), November Prelim. Durable Goods Orders (1.5%, -0.4%), December Final U. Of Mich. Sentiment (70.4, 70.4), November New Home Sales (770k, 745k).

Posted on Monday, December 20, 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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