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Bob Carey
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  US Economy and Credit Markets Ended April 1, 2022
Posted Under: Weekly Market Commentary

 
The Treasury yield curve flattened significantly over the course of the week with short-term Treasury yields rising and long-term Treasury yields falling. On Monday, the 5-year yield briefly rose above the 30-year yield for the first time since 2006.  Crude oil also dropped significantly on Monday as China began locking down most of Shanghai, causing investors to speculate that the global demand for oil would drop. On Tuesday, the 2-year yield briefly rose above the 10-year yield, which is widely considered a precursor of past recessions. Optimism for an end to the Russia-Ukraine conflict fueled investors to believe that peace could allow the Federal Reserve to increase interest rates more aggressively. Yields dropped again moderately on Wednesday before being mostly flat on Thursday as Crude oil dropped significantly again. On Friday, the 2-year yield rose materially above the 10-year yield, inverting the yield curve, as the jobs reports were strong enough for investors to continue to speculate for a possible double rate hike during the May Fed meeting. The market implied probability of a 50-basis point rise in the Federal Funds Rate increased to 80%, which was up 3% from the week before. Oil dropped 12.8% over the course of the week. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: February Factor Orders (-0.6%, 1.4%), February Final Durable Goods Orders (-2.2%, -2.2%); Tuesday: February Trade Balance (-$88.5b, -$89.7b); Wednesday: April 1 MBA Mortgage Applications (n/a, -6.8%); Thursday: April 2 Initial Jobless Claims (200k, 202k); Friday: February Final Wholesale Inventories MoM (2.1%, 2.1%).
Posted on Monday, April 4, 2022 @ 8:13 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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