US Economy and Credit Markets Ended May 26, 2017
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Treasuries fell early in the week, but reversed on Wednesday when the Federal Reserve released the minutes of its meeting on May 2-3. On Tuesday, the White House released its budget for 2018, proposing to cut most entitlement programs except Social Security and Medicaid and increase infrastructure spending, reigniting expectations of higher growth and inflation, which sent yields higher. Longer-term yields then fell on Wednesday after the Fed minutes showed it would take a cautious approach to hiking rates while looking for additional evidence that slow economic growth in the first quarter was temporary. Despite the prudence, the Federal Reserve is widely expected to raise rates at its June 13-14 meeting. Treasuries were relatively unchanged on Friday, despite new economic data, as markets closed early ahead of Memorial Day weekend. Annual real GDP growth was revised upward from 0.7% to 1.2% and new orders for durable goods declined 0.7% in April versus the consensus forecast of -1.5%. The University of Michigan Consumer Sentiment Index rose from 97 in April to 97.1 in May compared to a consensus forecast of 97.5. The survey indicated consumers expect wages to grow 2% over the next year, compared to 1.6% previously. Major economic reports (related consensus forecasts; prior data) for the upcoming week include Tuesday: May Conf. Board Consumer Confidence (119.9, 120.3), April Personal Income (0.4%, 0.2%), April Personal Spending (0.4%, 0.0%); Wednesday: May 26 MBA Mortgage Applications (0%, 4.4%), May Chicago Purchasing Manager (57.0, 58.3); Thursday: May 27 Initial Jobless Claims (239K, 234K), May ISM Manufacturing (54.6, 54.8), May Final Markit US Manufacturing PMI (52.5, 52.5), May ADP Employment Change (180K, 177K), April Construction Spending (0.5%, -0.2% MoM); Friday: May Change in Nonfarm Payrolls (185K, 211K), May Unemployment Rate (4.4%, 4.4%), April Trade Balance (-$46.0b, -$43.7b).
Posted on Tuesday, May 30, 2017 @ 8:27 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.