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  US Economy and Credit Markets Ended April 29, 2022
Posted Under: Weekly Market Commentary
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The US economy unexpectedly shrank at a 1.4% annual rate in the first quarter, following six consecutive quarters of growth. It was the first contraction since the second quarter of 2020. The US's widening trade deficit, which is expected to have topped $100 billion in March for the first time, and a slowdown of inventory buildup contributed to the decline in real GDP. The increase in the trade deficit was due to a surge in imports during the quarter. Meanwhile, the Employment Cost Index, which measures wages and benefits, increased a record 1.4% in the first quarter dating back to 2001. The sharp increase added to fears of continued high inflation and increased expectations that the Fed will tighten monetary policy more aggressively at its meetings this summer. The prospect of a more aggressive Fed contributed to the continued selloff in bonds and pushed up Treasury yields during the week. In the near term, the Fed meets on Tuesday and Wednesday this week and is widely expected to raise interest rates by 0.50%, which will be its largest rate hike since 2000. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: April ISM Manufacturing (57.6, 57.1), April Final S&P Global US Manufacturing PMI (59.7, 59.7); Tuesday: March Final Durable Goods Orders (0.8%, 0.8%), March Factory Orders (1.1%, -0.5%); Wednesday: May 4 FOMC Rate Decision – Upper Bound (1.00%, 0.50%), April 29 MBA Mortgage Applications (N/A, -8.3%), April ADP Employment Change (400k, 455k), March Trade Balance (-$107.0b, -$89.2b); Thursday: April 30 Initial Jobless Claims (180k, 180k); Friday: April Change in Nonfarm Payrolls (385k, 431k), April Unemployment Rate (3.5%, 3.6%).
Posted on Monday, May 2, 2022 @ 8:06 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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