US Economy and Credit Markets Ended April 21, 2017

Bob Carey
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US Economy and Credit Markets Ended April 21, 2017

Posted Under: Weekly Market Commentary

Treasury yields continued to march lower last week as geopolitical concerns and lackluster economic data sent investors into safe haven assets. On Friday, yields reversed course after President Trump promised to announce his tax reform plan this week. In Europe, the French presidential election stoked fears over the prospect of electing an anti-European Union candidate that will push to follow Britain's lead and "Frexit" the EU. On Monday, the Consumer Price Index showed a decline in March for the first time in more than a year. Core CPI, excluding food and energy, fell for the first time in seven years. The Federal Reserve's Beige Book report of local economic conditions signaled stronger job markets in all twelve districts; however, investors are still awaiting confidence to translate into higher wages and spending. The probability of a June rate hike, implied by Fed Funds futures, has decreased as a result of diminished inflationary pressures. Investors will be watching closely for upcoming economic data to show an uptick in inflationary pressures to warrant two more rate increases by the FOMC this year. The US government will run out of money to pay its bills on April 29 if Congress fails to agree on a spending bill. President Trump increased the odds of a government shutdown by attaching border wall funding to the bill, which Democrats oppose. The last government shutdown was in 2013 in a political fight over healthcare funding. Major economic reports (related consensus forecasts; prior data) for the upcoming week include Tuesday: March New Home Sales (588k; 592k), April Conference Board Consumer Confidence (123.7, 125.6); Wednesday: April 21 MBA Mortgage Applications; Thursday: March Preliminary Wholesale Inventories (0.3%, 0.4%), March preliminary Durable Goods Orders (1.5%, 1.8%), April 22 Initial Jobless Claims (--, 244k); Friday: Q1 Annualized GDP (1.2%, 2.1%), April Chicago Purchasing Manager Index (56.9, 57.7), and April University of Michigan Sentiment (98.4, 98.0).

Posted on Monday, April 24, 2017 @ 8:01 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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