US Economy and Credit Markets Ended Aug. 5, 2016
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Treasury yields rose last week as strong labor market reports sent yields higher. The ISM manufacturing report on Monday showed a decline in activity in July. Despite the slight slowdown in the pace of expansion, July's reading represents the second fastest pace of growth in the past year, second only to last month. On Tuesday, consumer spending for June rose more than anticipated, as steady hiring, low inflation and cheap borrowing costs prompted households to tap into their savings. Personal income saw a modest gain but fell short of expectations, with private sector wages leading the way with a 0.3% increase. On Wednesday, the ISM non-manufacturing index declined to 55.5 in July from 56.5 in June, falling slightly below consensus expectations. Despite most measures of activity being lower in July, they all remained above 50 signaling expansion. On Friday, July nonfarm payrolls increased to 255,000, easily beating the consensus expected of 180,000. The surge was led by private-sector payrolls, matching the strongest annual pace of growth in seven years. The unemployment rate held steady at 4.9% in July, but that was due to a 407,000 increase in the labor force. The trade deficit in June was larger than anticipated for June, as imports grew faster than exports. The rise in imports was led by crude oil, pharmaceuticals, and cell phones & other household goods. Major economic reports (and related consensus forecasts) for the upcoming week include: Tuesday: June Wholesale Trade Sales (0.0% MoM); Wednesday: August 5th MBA Mortgage Applications; Thursday: August 6th Initial Jobless Claims (265k); Friday: July Retail Sales Advance (0.4% MoM), July PPI Final Demand (0.1% MoM), August University of Michigan Sentiment (91.3).
Posted on Monday, August 8, 2016 @ 8:05 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.