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Bob Carey
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  US Economy and Credit Markets Ended Jan. 7, 2022
Posted Under: Weekly Market Commentary
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Yields again rose at nearly every point along the US Treasury curve last week as the Federal Reserve released its Minutes of the Federal Open Market Committee, December 14-15, 2021 and the market found the tone to indicate a preference for tightening monetary conditions. Participants noted that: "the current economic outlook was much stronger, with higher inflation and a tighter labor market than at the beginning of the previous normalization episode." The minutes also formally phased out the use of the word "transitory" when describing the inflationary conditions and instead suggest describing inflation as "elevated." The Committee decided to reduce the monthly pace of asset purchases by $20 billion (to $40 billion) for Treasury securities and $10 billion (to $20 billion) for agency Mortgage-Backed Securities. The target federal funds rate remained unchanged at 0 to ¼ percent. Last Thursday's December ISM Non-Manufacturing Index reading recognized a decline to 62.0 which was well short of expectations but still solidly expansionary. Friday's Nonfarm Payroll report saw an increase of nearly 200,000 in December, but expectations were for 450,000. Taking these into account, the unemployment rate dropped to 3.9% in December. Perhaps most interesting, is that the U.S. job market has more than 10 million openings and the quit rate was 3% which was the highest reading since the year 2000. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: November final Wholesale Inventories MoM (1.2%, unch.); Wednesday: January 7 MBA Mortgage Applications (N/A, -5.6%), December CPI MoM (0.4%, 0.8%); Thursday: January 8 Initial Jobless Claims (205k, 207k) and December Final PPI Demand MoM (0.4%, 0.8%); Friday:  December MoM Retail Sales Advance (0.0%, 0.3%) and January preliminary University of Michigan Sentiment (70.0, 70.6).
Posted on Monday, January 10, 2022 @ 8:23 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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