US Economy and Credit Markets Ended July 7, 2017
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Following an extended period of flattening, the yield curve steepened last week. Contributing to higher yields on longer dated Treasuries was the release of June's US Federal Reserve meeting minutes. The Fed indicated that it anticipates reducing its U.S. Treasury bond and mortgage-backed security holdings before the year is out. As of the May 2017 Federal Reserve quarterly report, the Fed held $4,470 billion which was accumulated in the aftermath of the financial crisis. The Fed was upbeat regarding inflation being at 1.7% and expects inflation to continue to creep to the targeted 2% rate over the next year. Participants did signal continued support for further gradual increases to the Federal Funds rate. Monday's ISM Manufacturing Index registered 57.8 for June which exceeded expectations and 15 of 18 industries reported expansion. The ISM Non-Manufacturing Index reading was released Tuesday and was also ahead of expectations as the service sector 16 of 18 industries registering expansion. Friday's Nonfarm payrolls came in well ahead of expectations (222,000 vs. 178,000) but the unemployment rate did tick higher as the labor force participation rate increased. For the week oil menacingly fell as OPEC's inability to curtail aggregate supply weighs on prices. Gold traded lower corresponding with tightening fiscal policy conditions of the United States and potentially Europe. Major economic reports (related consensus forecasts; prior data) for the upcoming week include: Tuesday: May Wholesale Inventories (.3%, unch.); Wednesday: Prior week MBA Mortgage Applications; Thursday: prior week Initial Jobless Claims; Friday: June CPI (.1%, -.1%), June Retail Sales (.1%, -.3%) and June Industrial Production (.3%, 0.0%).

Posted on Monday, July 10, 2017 @ 8:08 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.