US Economy and Credit Markets Ended March 10, 2017

On Wednesday, the much ballyhooed March Federal Reserve meeting will occur and the implied probability of a rate increase has rocketed to 100% based upon the future markets. Yields have risen as the perceived likelihood of a more aggressive Federal Reserve is being priced in. Correspondingly, gold sold off last week as did oil; but for very different reasons. Oil tumbled as a result of domestic inventory builds which have markets concerned that any OPEC cuts will be offset by an increase in shale production. US crude stockpiles have increased for four straight weeks and the price of oil has now returned to where it was when OPEC initially agreed to an output cut. Tuesday of last week the US trade deficit matched expectations with imports outpacing exports. On Wednesday, ADP showed an increase in February payrolls and then on Friday the nonfarm payroll numbers were reported.  For the previous month the report showed an increase of 235,000 jobs as well as a small increase to earnings. The strength of this report largely put to bed any remaining concerns that the Federal Reserve may not cut rates next week. In fact, on the strength of February job creation, the US unemployment rate is now 4.7% and below the Fed's long-term target of 4.8%. Major economic reports (and related consensus forecasts) for the upcoming week include: Tuesday: February PPI Demand (.1%, -.5%); Wednesday: prior week MBA Mortgage Applications, March Empire Manufacturing (15, -3.7), February Retail Sales (.1%, -.3%) and Federal Reserve Rate Decision (upper bound 1%, lower bound .75%); Thursday: February Housing Starts and prior week Initial Jobless Claims (241K, -2K); Friday: February Industrial Production (.2%, +.5%) and the February Leading Index (.4%, -.2%).
Posted on Monday, March 13, 2017 @ 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.