US Economy and Credit Markets Ended Feb. 4, 2022

Bob Carey
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US Economy and Credit Markets Ended Feb. 4, 2022

Posted Under: Weekly Market Commentary

The yield curve experienced a parallel shift upwards at each maturity last week. Friday witnessed an impressive jobs report that reinforced confidence in the economic recovery's durability. Despite record COVID infections in January, U.S. employers added 467,000 jobs during the month representing a 280% beat relative to the median estimate of 125,000. Average hourly earnings also topped expectations and rose 0.7% in January and 5.4% year-over-year. Importantly, the labor participation rate jumped to 62.2% from December's 61.9% level. The participation rate has increased 50 bps since October and is key to improving supply chains and curbing inflation. However, it still remains over 100 bps below pre- Covid levels. Nonetheless, the jobs report will likely provide the Fed with the necessary confidence in the U.S. economy to begin its path to multiple rate hikes in 2022. As of Friday's close, the swap market is pricing in over five rate hikes during the year. Friday's jobs report reiterated the economy's strength reflected in economic reports released earlier in the week. Chicago PMI rose to 65.2 when estimates called for a deceleration to 61.8. January ISM Manufacturing and January Markit US Manufacturing PMI results also surprised to the upside. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Tuesday: December Trade Balance (-$83.0b, -$80.2b); Wednesday: February 4 MBA Mortgage Applications (N/A, 12%), December Wholesale Inventories MoM (2.0%, 2.1%); Thursday: January CPI MoM (0.5%, 0.5%), February 5 Initial Jobless Claims (235k, 238k); Friday: Preliminary February University of Michigan Sentiment Survey (67.5, 67.2).

Posted on Monday, February 7, 2022 @ 9:03 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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