US Economy and Credit Markets Ended June 22, 2018

Last week began with tariff threats causing investors to worry about the impact to global economic growth and resulted in a safety bid for Treasuries. The rates market was also buoyed by political concerns in Europe, namely, the appointment of two Euro-skeptics to chair key economic committees in Italy. The benchmark 10-year note yield declined to 2.89% on Tuesday which resulted in the spread between two- and 10-year notes reaching a low of 35bps, a level not seen since 2007. Federal Reserve Chairman Jerome Powell's hawkish comments at the ECB's annual policy conference on Wednesday caused Treasuries to reverse course. Chairman Powell reaffirmed the need for additional federal-funds rate hikes due to a tight labor market and anchored inflation expectations. The Labor Department reported a decline in Initial Jobless Claims by 3,000 on Thursday, the fourth consecutive weekly decline. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Monday: May New Home Sales (667k, 662k); Tuesday: June Conference Board Consumer Confidence (128.0, 128.0); Wednesday: June 22 MBA Mortgage Applications (N/A, 5.1%), May preliminary Wholesale Inventories MoM (0.2%, 0.1%), May preliminary Durable Goods Orders (-0.9%, -1.6%); Thursday: 1Q GDP Annualized QoQ (2.2%, 2.2%), June 23 Initial Jobless Claims (220k, 218k); Friday: May Personal Income (0.4%, 0.3%), May Personal Spending (0.4%, 0.6%), June Chicago Purchasing Manager (60.0, 62.7) and June Final University of Michigan Sentiment (99.2, 99.3).
Posted on Monday, June 25, 2018 @ 7:39 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.