US Economy and Credit Markets Ended Feb. 23, 2018

Treasury prices were mixed and mostly flat over the course of the week as the Federal Reserve released the minutes from the January meeting and amid uncertainty in the Italian election. The central bank's minutes were released Wednesday with comments that were read to be more "hawkish" by investors. The Fed saw muted risks of the economy overheating and that the outlook for future growth raises the risk for inflation, meaning that additional rate hikes during the year may be needed. Currently the dot plot suggests three rate hikes in 2018, but investors are speculating that there could be a fourth. However, investors are also speculating that there is a chance the populist euroskeptic party may be elected during Italy's March 4 election, which could lead to deadlock in parliament and threaten the prospects of economic reform. This caused investors to seek the perceived safety of Treasurys. Oil dropped about 3% over the week with an unexpected drop of U.S. crude oil inventories. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Monday: January New Home Sales (645k, 625k); Tuesday: January Preliminary Wholesale Inventories MoM (N/A, 0.4%), January Preliminary Durable Goods Orders (-2.5%, 2.8%), February Conf. Board Consumer Confidence (126.0, 125.4); Wednesday: February 23 MBA Mortgage Applications (N/A, -6.6%), 4Q Second GDP Annualized (2.5%, 2.6%), February Chicago Purchasing Manager (65.0, 65.7); Thursday: January Personal Income (0.2%, 0.4%), January Personal Spending (0.2%, 0.4%), February 24 Initial Jobless Claims (227k, 222k), February Final Markit US Manufacturing PMI (55.8, 55.9), January Construction Spending MOM (0.2%, 0.7%), February ISM Manufacturing (58.7, 59.1); Friday: February Final U. of Mich. Sentiment (99.0, 99.0).
Posted on Monday, February 26, 2018 @ 8:38 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.