US Economy and Credit Markets Ended April 28, 2017
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Treasury prices dropped over the course of the week as investors took a more risk-on approach in the wake of the first round of the French Presidential election. Sunday's election in France resulted in Emmanuel Marcon and Marine Le Pen advancing to a runoff. Polling suggests that Marcon, who is seen as the centrist candidate, is likely to win, which alleviated fears of France leaving the European Union and reduced fears of significant change in Europe. This caused many investors to leave safe-haven assets like Treasuries and move to riskier assets like Equities. Strong new home sales of 621k compared to estimates of 584k on Tuesday also contributed to this week's risk-on environment. However, Treasuries rebounded later in the week as President Trump's aggressive tax cut plan was met with skepticism on Wednesday as broad rhetoric instead of specific details from cabinet members led investors to doubt that tax reform would pass. On Thursday, the European Central Bank kept rates unchanged when investors believed ECB President Mario Draghi might begin to taper, which increased demand for European bonds. Treasuries ended the week down on Friday as the Consumer Price Index reading of 2.3% was higher than the expected 2.0%, even though the increases in GDP and Personal Consumption were less than expected. Major economic reports (related consensus forecasts; prior data) for the upcoming week include: Monday: March Personal Income (3.2%, 0.4%), March Personal Spending (0.2%, 0.1%), April Final Market US Manufacturing PMI (52.8, 52.8), April ISM Manufacturing (56.5, 57.2), March Construction Spending (0.4%, 0.8%); Wednesday: April 28 MBA Mortgage Applications, April ADP Employment Chante (178k, 263k), May 3 FOMC Rate Decision Upper Bound (1.00%, 1.00%); Thursday: March Trade Balance (-$44.5b, -$43.6b), April 29 Initial Jobless Claims (248k, 257k), March Factory Orders (0.5%, 1.0%), March Final Durable Goods Orders; Friday: April Change in Nonfarm Payrolls (190k, 98k), April Unemployment Rate (4.6%, 4.5%).
Posted on Monday, May 1, 2017 @ 8:14 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.