US Economy and Credit Markets Ended September 14, 2018

 
Treasury prices dropped moderately over the course of the week on increased supply of short-term debt. On Tuesday, an offering of short-term treasuries, which are most vulnerable to interest rate increases, was met with tempered demand causing Treasury prices to fall in order to make room for the new supply. Investors continue to expect faster rate hikes from the Federal Reserve as the implied probability of a second rate hike by December rose to 77.2%, compared to 66.9% a week ago. Wholesale inflation of -0.1% was lower than the expected 0.2% and consumer prices rose only 0.2% compared to an expected 0.3%, which tempered fears of increased inflation, especially after a higher than expected increase in wages. Treasury yields did not move very much the rest of the week as retail sales growth of 0.1% was below an expected 0.4% but industrial production was up 0.4% compared to an expected growth of 0.3%. Yields rose slightly on Friday as investors were more optimistic with regard to the trade tensions between the U.S. and China. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Monday: September Empire Manufacturing (23.0, 25.6); Wednesday: September 14 MBA Mortgage Applications (N/A, -1.8%), August Housing Starts (1.24m, 1.168m); Thursday: September 15 Initial Jobless Claims (210k, 204k), August Leading Index (0.5%, 0.6%), August Existing Home Sales (5.38m, 5.34m); Friday: September Prelim. Markit US Manufacturing PMI (55.0, 54.7).
Posted on Monday, September 17, 2018 @ 8:06 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.