US Economy and Credit Markets Week Ended May 16, 2014
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Treasury prices rose significantly over the week on poor economic reports and monetary policy signals. Equity markets started out well on Monday as investors looked ahead to the retail sales report and the expectation that good news would cause central banks to possibly raise rates, which sent yields to a two week high. However, on Tuesday, the retail sales report was very disappointing and Treasury prices rebounded. On Wednesday the European Central Bank and the Bank of England both signaled that they would continue to use monetary policies to bolster equity markets, which caused Treasury prices to rise even more than the day before. This rise continued on Thursday as many investors with positions that were short interest rates used the drop in rates as an opportunity to close out these positions. Another reason for Thursday's Treasury rally was the flight to safety from the equity market that dropped significantly as yields hit their lowest level of the year. Treasury prices pulled back moderately on Friday as better than expected housing construction data suggested a rebound in the housing market. Major economic reports (and related consensus forecasts) for the upcoming week include: Wednesday: May 16 MBA Mortgage Applications; Thursday: May 17 Initial Jobless Claims (310,000), May P Markit US Manufacturing PMI (55.5), April Existing Home Sales (4.68M), April Leading Index (0.3%); Friday: April New Home Sales (425,000).
Posted on Monday, May 19, 2014 @ 8:21 AM

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.