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Bob Carey
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  US Economy and Credit Markets Ended Feb. 26, 2021
Posted Under: Weekly Market Commentary
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Treasury yields rose significantly over the course of the week, with the 10-year Treasury yield rising above 1.50% before settling at 1.41%, on optimism of the COVID vaccine, a recovery in the U.S. economy, a massive fiscal stimulus policy and loose monetary policy. These have all led to significant inflation worries and investors are demanding a higher yield.  Early in the week Treasury yields rose moderately despite comments from Federal Reserve Chairman Jerome Powell, who said the central bank would "clearly communicate" any change in bond buying well in advance, along with saying that the rising yields were a "statement of confidence on the part of the markets that we will have a robust and ultimate complete recovery." Powell also suggested a longer timetable to reduce the bond buying and first interest rate increase. On Thursday, yields soared as the sale of $62 billion of 7-year notes had its poorest showing in history when the gap between the highest yield and the beginning yield reached a record 4.2 basis points. Yields pulled back slightly on Friday but still finished high enough to have the largest one-month rise in interest rates since November 2016. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: February Final Market US Manufacturing PMI (58.5. 58.5), January Construction Spending MoM (0.8%, 1.0%), February ISM Manufacturing (58.6, 58.7); Wednesday: February 26 MBA Mortgage Applications (n/a, -11.4%), February ADP Employment Change (170k, 174k); Thursday: February 27 Initial Jobless Claims (793k, 730k), January Final Durable Goods Orders (n/a, 3.4%), January Factory Orders (1.3%, 1.1%); Friday: February Change in Nonfarm Payrolls (150k, 49k), February Unemployment Rate (6.4%, 6.3%), January Trade Balance (-$67.5b, -$66.6b).
Posted on Monday, March 1, 2021 @ 9:00 AM • Post Link Share: 
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