US Economy and Credit Markets Ended March 23, 2018
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In his first meeting as Chairman of the Federal Reserve, Jerome Powell and his fellow governors chose to raise the federal-funds rate by 25 basis points to a range of 1.5 to 1.75%. The Fed called out strong growth in jobs while they had previously discussed jobs growth as solid. Additionally, they noted that the economic outlook had strengthened and increased their GDP growth estimate from 2.5% for 2018 to 2.7%. They also guided to 2.4% GDP growth in 2019, up from 2.1% previously. They expect inflation to reach its target in the coming months but left their 2018 federal funds target unchanged at 2.0-2.25%; which would represent three rate hikes. During the prior week President Trump threatened $60 billion of tariffs on Chinese imports and called out Chinese efforts to take U.S. Technology via deception.  China responded by suggesting they would consider suspending their purchases of Treasuries. Currently, China ownership represents around 19% of all foreign Treasury holdings. This threat caused the longer end of the yield curve to increase on Friday. Major economic reports (related consensus forecasts, prior data) for the upcoming holiday-shortened week include: Tuesday: March Conference Board Consumer Confidence (131.0, 130.8); Wednesday: March 23 MBA Mortgage Applications (N/A, -1.1%), February preliminary Wholesale Inventories (N/A, 0.8%) and Q4 2017 Annualized QoQ GDP (2.7%, 2.5%); Thursday: March Chicago Purchasing Manager (62.0, 61.9), February Personal Income (0.4%, 0.4%), February Personal Spending (0.2%, 0.2%), March University of Michigan Consumer Sentiment (102.0, 102.0) and March 244 Initial Jobless Claims (230K, 229K).
Posted on Monday, March 26, 2018 @ 8:09 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.