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Bob Carey
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  US Economy and Credit Markets Ended June 10, 2022
Posted Under: Weekly Market Commentary
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Treasury bond yields rose meteorically across the yield curve last week as the bond selloff deepened. Last week's rise in Treasury bond yields was highlighted by the two-year Treasury note hitting its highest level in nearly a decade and a half. Friday morning's May Consumer Price Index (CPI) print was the leading cause for the upward move in Treasury bond yields. The CPI increased 1.0% in May, 0.3% higher than expected, with energy prices up 3.9% and food up 1.2%. While real wages (ex-inflation) were down 0.6% last month. According to Bloomberg, in response to the higher-than-expected May CPI data, the front-end of the yield curve repriced to a 50% chance of the Federal Reserve increasing the policy rate by 75 basis points as early as the July Federal Reserve policy meeting. Barclays revised their forecast and now call the Federal Reserve increasing the policy rate by 75 basis points in the June policy meeting. With CPI up 8.6% versus last year, it is becoming increasingly apparent that inflation is not transitory. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Tuesday: May PPI Final Demand MoM (0.8%, 0.5%), May Final PPI Ex Food and Energy MoM (0.6%, 0.4%), May PPI Final Demand YoY (10.8%, 11.0%), May Final PPI Ex Food and Energy YoY (8.6%, 8.8%); Wednesday: June 10 MBA Mortgage Applications (n/a, -6.5%), June Empire Manufacturing (4.5%, -11.6%), May Retail Sales Advance MoM (0.2%, 0.9%), June 15 FOMC Rate Decision (Upper Bound) (1.50%, 1.00%); Thursday: May Building Permits (1789k, 1823k), May Housing Starts (1709k, 1724k), June 11 Initial Jobless Claims (215k, 229k), June 4 Continuing Claims (1300k, 1306k); Friday: May Industrial Production MoM (0.4%, 1.1%), May Capacity Utilization (79.2%, 79.0%), May Leading Index (-0.4%, -0.3%).
Posted on Monday, June 13, 2022 @ 9:11 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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