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Bob Carey
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  US Economy and Credit Markets Ended May 6, 2022
Posted Under: Weekly Market Commentary
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Long-term Treasury yields rose significantly over the course of the week as the Federal Reserve increased interest rates 50 basis points and investors worried about stagflation. On Monday, interest rates rose moderately, and the 10-year yield briefly exceeded 3.0% for the first time since 2018.  The yield curve steepened on Wednesday as short-term yields dropped significantly, and Federal Reserve Chairman Jerome Powell said that the Fed is not actively considering a 75 basis point rate increase at the next meeting. He also said that the Fed will not begin reducing its nearly $9 Trillion balance sheet until June and that more 50 basis point rate hikes are possible at upcoming meetings. Treasury yields then rose significantly, especially amongst longer-term maturities, on Thursday and the 10-year yield closed above 3.0% as nonfarm productivity fell at an annual rate of -7.5%, the lowest level since 1947, and equities sold off. Investors continued to worry about inflation, which is growing at the fastest pace in nearly 40 years, and lower growth outlooks leading to stagflation. On Friday, long-term yields continued to rise significantly, with the 10-year yield closing above 3.1%, while the yield curve steepened with short-term yields falling. Oil continued its upward trend as the price per barrel rose 5% over the course of the week. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: March Final Wholesale Inventories MoM (2.3%, 2.3%); Wednesday: May 6 MBA Mortgage Applications (n/a, 2.5%), April CPI MoM (0.2%, 1.2%); Thursday: April PPI Final Demand MoM (0.5%, 1.4%), May 7 Initial Jobless Claims (190k, 200k); Friday: May Prelim. U. of Mich. Sentiment (64.0, 65.2).
Posted on Monday, May 9, 2022 @ 8:18 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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