US Economy and Credit Markets Ended June 1, 2018

A holiday shortened week saw US Treasury markets fluctuate due to an array of matters. On Tuesday, 10-year Treasury notes declined 15.9 bps, the largest single-day drop since the day following Britain's vote to leave the European Union, as investors hid in safe havens amid turmoil surrounding the hostile Italian political environment and their standing in the European Union. US Treasury yields continued to dip Thursday as the US announced tariffs on steel and aluminum imported from Canada, Mexico, and the European Union. Investors escaped risky assets for US Treasuries as investors fear the tariffs could spark retaliatory actions from Canada, Mexico, and the European Union, potentially leading to a trade war. The week wrapped up with the yield on US 10-year Treasury notes climbing on Friday. The increase in yields was due to a strong jobs report which saw data for unemployment, nonfarm payrolls, and average hourly earnings better than analyst expectations. Investors view the strong jobs report as an indicator that the Federal Reserve will increase rates later in mid-June. Meanwhile in Italy, tensions cooled and uncertainty diminished as opposing populist parties agreed to form a coalition ending months of political stalemate. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Monday: April Factory Orders (-0.5%,1.6%), April Final Durable Goods Orders (N/A, -1.7%); Wednesday: June 1 MBA Mortgage Applications (N/A, -2.9%), April Trade Balance (-$49.0b, -$49.0b); Thursday: June 2 Initial Jobless Claims (222k, 221k); Friday: April Final Wholesale Inventories (0.0%, 0.0%).
Posted on Monday, June 4, 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.