US Economy and Credit Markets Ended March 16, 2018
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The yield curve flattened last week, as long-term bond prices were supported by easing inflation fears. Treasurys sold off in January and February on fears of higher inflation, increasing the yield on the benchmark 10-year U.S. Treasury note from 2.409% at the end of 2017 to 2.870% at the end of February, but recent economic data eased those concerns. Last week, the Labor Department said the Consumer Price Index rose 0.2% in February excluding food and energy, which was a slightly slower pace than the 0.3% increase in January, causing longer-term Treasury prices to rise. Over the last 12 months through February, consumer prices rose 2.2%. Longer-term Treasury prices rose again on Wednesday after it was announced that U.S. retail sales fell 0.1% in February, which was below consensus expectations and the third consecutive month of declines. The sentiment then reversed on Friday after data showed U.S. industrial production rose 1.1% in February, which easily beat expectations, and 4.4% over a year earlier. The yearly increase was the strongest since March 2011. This week, the Federal Open Market Committee meets on Tuesday and Wednesday and is expected to announce the first of three projected interest rate increases in 2018. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Wednesday: March 21 FOMC Rate Decision - Upper Bound (1.75%, 1.50%), March 16 MBA Mortgage Applications (N/A, 0.9%), February Existing Home Sales (5.40m, 5.38m); Thursday: March 17 Initial Jobless Claims (225k, 226k), March Preliminary Markit US Manufacturing PMI (55.5, 55.3), February Leading Index (0.5%, 1.0%); Friday: February Preliminary Durable Goods Orders (1.7%, -3.6%), February New Home Sales (620k, 593k).
Posted on Monday, March 19, 2018 @ 8:11 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.