US Economy and Credit Markets Ended April 13, 2018

Treasury prices dropped over the course of the week, with short-term Treasurys dropping more than long-term Treasurys, on easing fears of both a trade war between the United States and China and a possible military conflict in Syria. Leaders of both nations made comments alluding that an agreement could be reached between the United States and China. President Trump said on Monday that China will take down its trade barriers and reach a deal as President Xi gave a speech on Tuesday saying that foreign countries will have greater access to China's financial and manufacturing sectors, while improving protections for intellectual property. These comments led to a risk-on appetite with less demand for Treasurys, causing prices to fall. Long-term Treasury prices rose slightly on Wednesday as President Trump implied a possible strike on Syria. However, all Treasury prices fell moderately on Thursday when President Trump walked back comments of an imminent strike on Syria. On Friday, short-term Treasury prices fell slightly as long-term Treasury prices rose slightly on upbeat corporate earnings. Inflation readings were slightly above expectations but the Fed minutes released on Wednesday indicated a more aggressive stance on monetary tightening. Oil prices rose 9% over the week over conflicts on the Arabian peninsula and the tension in Syria. Other major economic reports (related consensus forecasts, prior data) for the upcoming week include: Monday: April Empire Manufacturing (18.2, 22.5), March Advance Retail Sales MoM (0.4%, -0.1%); Tuesday: March Housing Starts (1276k, 1236k), March Industrial Production MoM (0.3%, 1.1%); Wednesday: April 13 MBA Mortgage Applications (N/A, -1.9%); Thursday: April 14 Initial Jobless Claims (230k, 233k), March Leading Index (0.3%, 0.6%).
Posted on Monday, April 16, 2018 @ 8:02 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.