US Economy and Credit Markets Ended July 14, 2017

 
Treasury prices rose over the course of the week as top officials from both the U.S. Federal Reserve and European Central Bank weighed in about their respective monetary policies. Fed Chairwoman Janet Yellen gave prepared congressional testimony which implied that rate hikes would continue to be gradual and depend on how inflation evolved. This testimony combined with a flat reading of inflation for June on Friday led investors to believe that another rate hike may be delayed until next year. Yellen also said that "rates would not have to rise all that much further to get to a neutral policy stance." On Monday, an ECB chief economist said that "we still need a long period of accommodative policy before we are ready," which caused Treasury prices to rise. However, the Wall Street Journal reported on Thursday that ECB President Mario Draghi will signal optimism for the Eurozone economy and a reduced need for stimulus when he speaks at the upcoming Jackson Hole meeting of central bankers. This caused Treasury prices to fall for the one and only time during the week. Geopolitical concerns also increased demand for Treasuries as Donald Trump Jr. released emails about a meeting he had with ties to Russia, leading to further speculation of collusion on Tuesday. Retail sales that were slightly negative on Friday when estimates called for a slight increase also led to increased demand for Treasuries. Oil rose over 5% during the week on increased Chinese demand and a larger-than-expected drop in U.S. crude stockpiles. Major economic reports (related consensus forecasts; prior data) for the upcoming week include: Monday: July Empire Manufacturing (15.0); Tuesday: June Import Price Index (-0.2%, -0.3% MoM, 1.3%, 2.1% YoY); Wednesday: July 14 MBA Mortgage Applications (-7.4%), June Housing Starts (1.155M, 1.095M); Thursday: July 15 Initial Jobless Claims (245k, 247k), July Philadelphia Fed Business Outlook (23.7, 27.6), June Leading Index (0.4%, 0.3%).
Posted on Monday, July 17, 2017 @ 8:44 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.