US Economy and Credit Markets Ended August 31, 2018

Treasury prices dropped moderately over the course of the week on trade and geopolitical news. On Monday, the Trump Administration announced they had reached a trade deal with Mexico and suggested that the North American Free Trade Agreement would be overhauled and talks with Canada would soon begin. It was also reported on Tuesday that Germany was considering financial aid to Turkey, but talks were in the very early stages. Together, this caused Treasury yields to rise significantly the first half of the week as investors followed a risk-on trade. However, Treasuries rebounded moderately the second half of the week as it was reported that President Donald Trump planned on going ahead with imposing $200B of tariffs on Chinese imports next week. On Friday, trade talks with Canada did not reach a deal but talks will continue next week. Congress is considered more likely to approve a NAFTA deal if all three countries are involved as opposed to just two. President Trump also warned on Friday he could pull out of the World Trade Organization. Major economic reports (related consensus forecasts, prior data) for the upcoming holiday-shortened week include: Tuesday: August Final Markit US Manufacturing PMI (54.5, 54.5), July Construction Spending MoM (0.5%, -1.1%), August ISM Manufacturing (57.6, 58.1); Wednesday: August 31 MBA Mortgage Applications (N/A, -1.7%), July Trade Balance (-$50.0b, -$46.3b); Thursday: August ADP Employment Change (193k, 219k), September 1 Initial Jobless Claims (213k, 213k), July Final Durable Goods Orders (N/A, -1.7%); Friday: August Change in Nonfarm Payrolls (191k, 157k), August Unemployment Rate (3.8%, 3.9%).
Posted on Tuesday, September 4, 2018 @ 8:05 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.