US Economy and Credit Markets Week Ended May 23, 2014
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Treasury prices fell through the week before rising Friday as investors became cautious regarding risk as Ukraine is set to hold elections over the weekend. Through the start of this year expectations were for US Yields rising as the Federal Reserve unwound its asset purchases. The opposite has held true. In May, the 10-year yield reached its lowest level since October, 2013 and inflation does not seem to be an immediate concern to investors. While domestic economic reports have a Goldilocks feel of "not too hot and not to cold," Europe is an area of concern for investors as its economic growth remains suppressed and the ECB worries about the possibility of deflation throughout the Euro area. In sum, US Treasuries remain a safe haven in a risky world. Wednesday's May 16 MBA Mortgage Applications was the first significant economic report of the week and showed applications rising .9% in the previous week as yields continue to decline. Thursday's initial jobless claim report was unfavorable as 326,000 new claims were filed. Estimates were for 310,000 new applicants. The Federal Reserve continues to indicate monetary policy will be made with regard to both inflation targets as well as full employment in the economy, the duel mandate. April Existing Home Sales numbers were also released Thursday and were slightly below expectations. Then Friday, the April New Home Applications report surprising to the positive. Major economic reports (and related consensus forecasts) for the upcoming shortened, but still busy, holiday week include: Tuesday: April Durable Goods orders (-.7%) and May Consumer Confidence Index (83); Wednesday: May 23 MBA Mortgage Applications; Thursday: First Quarter Annualized GDP (-.5%) and May 24 Initial Jobless Claims (318,000, -8,000); Friday: April Personal Income (.3%), Personal Spending (.2%) and University of Michigan Confidence (82.5).

Posted on Tuesday, May 27, 2014 @ 8:50 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.