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Bob Carey
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  US Economy and Credit Markets Ended March 25, 2022
Posted Under: Weekly Market Commentary
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U.S. Treasury bond yields rose substantially across the yield curve last week. Early in the week, Federal Reserve Chairman Powell indicated the Fed is open to increasing the federal-funds rate by 50 basis point increments and surpassing the estimated policy neutral rate set by the Fed, if necessary to tamp down inflation. After the perceived hawkish commentary by Chairman Powell, the money markets priced in roughly a 70% chance of a 50-basis point increase the federal-funds rate in the May meeting. This caused a sharp decrease in Treasury bond prices, pushing Treasury yields up. Notably, two-year and ten-year Treasury yields reached their highest levels since 2019, while the five- and thirty-year yield curve contracted near inversion. Broadly, Treasuries are on pace for the worst quarterly losses since 1973, according to Bloomberg. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: February Preliminary Wholesale Inventories MoM (1.1%, 0.8%); Tuesday: March Conf. Board Consumer Confidence (107.0, 110.5); Wednesday: March 25 MBA Mortgage Applications (N/A, -8.1%), March ADP Employment Change (450k, 475k), 4Q Third GDP Annualized (7.0%, 77.0), 4Q Third Personal Consumption (3.1%, 3.1%), 4Q Third GDP Price Index (7.1%, 7.1%), 4Q Third Core PCE QoQ (5.0%, 5.0%); Thursday: February Personal Income (0.5%, 0.0%), February Personal Spending (0.5%, 2.1%), March 26 Initial Jobless Claims (200k, 187k), March 19 Continuing Claims (1350k, 1350k), March MNI Chicago PMI (57.0, 56.3); Friday: March Change in Nonfarm Payrolls (485k, 678k), March Change in Manufacturing Payrolls (485k, 678k), March Unemployment Rate (3.7%, 3.8%), March Final S&P Global US Manufacturing PMI (58.5, 58.5), March ISM Manufacturing (58.5, 58.6).
Posted on Monday, March 28, 2022 @ 8:21 AM • Post Link Share: 
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