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Bob Carey
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  US Economy and Credit Markets Ended May 28, 2021
Posted Under: Weekly Market Commentary
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Treasury yields dropped mildly over the course of the week despite the Federal Reserve's discussion of tapering asset purchases and the Biden administration's $6 trillion budget proposal. Even though the Fed is expected to pare back the $120 billion a month bond buying program, investors have read many of the comments from the Fed as dovish. Fed Vice Chairman Richard Clarida said that he thinks "it's going to depend on the flow of data that we get" and Mary Daly, President of the San Francisco Fed, said that "we need to be patient, data dependent, but very patient." Chicago Fed President Charles Evans said that the high inflation readings are not the start of a steady move to higher consumer prices. These comments led investors to believe that tapering would occur more slowly than previously expected. However, on Thursday, yields rebounded on renewed inflations concerns as the Biden administration proposed a $6 trillion budget for fiscal year 2022, which would be the highest sustained level of spending since World War II, adjusted for inflation. Ultimately, yields ended the week down mildly. Major economic reports (related consensus forecasts, prior data) for the upcoming holiday-shortened week include Tuesday: May Final Markit US Manufacturing PMI (61.5, 61.5), April Construction Spending MoM (0.6%, 0.2%), May ISM Manufacturing (61.0, 60.7); Wednesday: May 28 MBA Mortgage Applications (n/a, -4.2%); Thursday: May ADP Employment Change (680k, 742k), May 29 Initial Jobless Claims (405k, 406k); Friday: May Change in Nonfarm Payrolls (663k, 266k), May Unemployment Rate (5.9%,6.1%), April Final Durable Goods Orders (n/a, -1.3%), April Factory Orders (0.2%, 1.1%).
Posted on Tuesday, June 1, 2021 @ 8:08 AM • Post Link Share: 
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