US Economy and Credit Markets Ended Feb. 9, 2018

The yield on the benchmark U.S. 10-year Treasury note topped 2.8% last week, a four-year high, after the jobs report was released on Friday, ending a week that saw a selloff in the bond market. The report showed average hourly earnings for private-sector workers rose 2.9% in January over a year earlier while the unemployment rate held at 4.1%. The growth in wages, which was the strongest year-over-year gain since 2009, stoked higher expectations for inflation and prompted the selloff in U.S. government bonds on Friday. The Federal Open Market Committee announced after its meeting on Tuesday and Wednesday that it still expects to raise interest rates three times in 2018, but higher inflation could prompt the FOMC to raise rates four times this year. According to CME Group, the probability of at least four rate increases in 2018 jumped from 25% to 30% after the jobs report was announced. The FOMC meeting marked the last for Fed Chairwoman Janet Yellen. Her successor, Fed governor Jerome Powell, is scheduled to be sworn in as chairman of the Fed board of governors this week. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Tuesday: December Trade Balance (-$52.0b, -$50.5b); Wednesday: February 2 MBA Mortgage Applications (N/A, -2.6%); Thursday: February 3 Initial Jobless Claims (233k, 230k); Friday: December Final Wholesale Inventories MoM (0.2%, 0.2%).
Posted on Monday, February 12, 2018 @ 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.