US Economy and Credit Markets Ended Feb. 10, 2017

The yield on the U.S. 10-year Treasury note rose on Thursday and Friday after three straight days of declines. President Trump told airline executives on Thursday in a meeting at the White House that an announcement concerning tax reform will be made in the coming weeks. The potential fiscal policy move renewed expectations of higher economic growth and inflation. The breakeven rate, which is a proxy for the market's forecast of inflation by measuring the difference in yield between a nominal bond and an inflation-indexed bond, rose on Thursday and Friday as investor's expectations for inflation increased.  Meanwhile, U.S. equities finished the week at record highs, lowering demand for government bonds and sending yields higher. Earlier in the week, Treasuries rose as demand was spurred by heightened political uncertainty in Europe. In particular, the upcoming French presidential election in April increased fears that France could leave the European Union. Notably, the spread between French and German government bond yields climbed to a four-year high during the week. Major economic reports (and related consensus forecasts) for the upcoming week include: Tuesday: January PPI Final Demand (0.3% MoM, 1.5% YoY); Wednesday: Feb 10 MBA Mortgage Applications, February Empire Manufacturing (7.0), January CPI (0.3% MoM, 2.4% YoY), January Retail Sales Advance (0.1% MoM), January Industrial Production (0% MoM); Thursday: January Housing Starts (1.2M), Feb 11 Initial Jobless Claims (245K), February Philadelphia Fed Business Outlook (18.0); and Friday: January Leading Index (0.5%).
Posted on Monday, February 13, 2017 @ 8:03 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.