US Economy and Credit Markets Ended Jan. 27, 2017

Yields rose for the second consecutive week as a slew of economic data indicates a still expanding domestic economy. Q4 2016 registered a 1.9 percent growth rate and consumer spending popped 2.5 percent for the quarter. Amid these positives, however, the US trade deficit widened to levels not seen since 2010. This comes at a time when trade is being hotly debated as a result of the new administration's declared intention to renegotiate trade deals. Last Tuesday, existing home sales were registered declining 2.8 percent for the month of December and on Thursday new single-family home sales declined 10.4 percent for the month. Median prices were off as well. While an increase in interest rates has raised concerns about the affordability of homes, the months' supply of existing homes, how long it would take to sell the current inventory at the most recent selling pace, is only 3.6 months and interest rates are still low relative to historical levels. According to the NAR, anything less than 5.0 months is considered tight supply. Major economic reports (and related consensus forecasts) for the upcoming week include: Monday: December personal income and personal spending data (.4%, +.4% and .5%, +.3%); Tuesday: January Chicago Purchasing Manager (55, +.4) and January Conference Board Consumer Confidence (112.9, -.8); Wednesday: Prior week MBA Mortgage Applications, January ADP employment Change (167K, +14K), January Markit US Manufacturing PMI (55.1, unch.), January ISM Manufacturing (55, +.3) and FOMC Rate Decision (.75% upper bound, .5% lower bound); Thursday: Prior week Initial Jobless Claims (250K, -9K); Friday: January change in nonfarm payrolls (175K, +19K), January employment rate (4.7%, unch.), December factory orders (1%, +3.4%) and December Durable Goods Orders.
Posted on Monday, January 30, 2017 @ 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.