US Economy and Credit Markets Week Ended May 30, 2014

Treasury yields fell at the long end of the curve while rising at the short end as economic reports which showed slowing U.S. growth during this holiday shortened week. On Tuesday, when the market reopened after Memorial Day, Treasuries traded sideways when Q1 Consumer Confidence was reported in-line at 83 and April Durable Goods orders expanded +.8%. Investors also wagered that the Fed would not increase short term rates quickly as an auction of 2 year notes drew strong demand. On Wednesday, Treasuries rallied again as another U.S. auction for 5 year notes drew strong demand and gains in European sovereign debt boosted the relative attractiveness of U.S. debt. On Thursday, Q1 GDP was reported to have fallen -1% vs. expectations for a -.5% drop, while April pending home sales increased just +.4% MoM. Some relatively strong words in the latest remarks from the ECB, pledging to restore inflation also caused Treasuries to rally as their attractiveness relative to other European Sovereign assets increased. On Friday, Treasuries ticked higher to close out the month with the biggest monthly gains since January. Reports on Friday showed Apr. Personal Spending declined -.1% against expectations for a .2% increase. Major economic reports (and related consensus forecasts) for the upcoming shortened week include: Monday: May ISM Manufacturing (55) and Apr. Construction Spending (+.6%); Tuesday: Apr. Factory Orders (.5%) and May Total/Domestic Vehicle Sales ($16.1M/12.2M); Wednesday: Apr. Trade Balance ($-40.6B) and May. ISM Non-Manf. Composite (55.5); Thursday: May 31 Initial Jobless Claims (310K); Friday: May Change in Nonfarm Payrolls (218k), May Change in Manufact. Payrolls (10K), and May Unemployment Rate (6.4%).
Posted on Monday, June 2, 2014 @ 8:15 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.