US Economy and Credit Markets Ended February 15, 2019

Treasuries fell for the first three days of last week before rising on Thursday as retail sales data showed significant weakness compared to expectations. The US 2 year and 10 year Treasury Note spread is only up marginally from December's lows, even amid a strong start to the year for equity markets, and fell sharply last week. This may be partly due to mixed economic data. While wage growth and job growth are both strong, last week saw retail sales register a 1.2% decline in December, The Producer Price Index (PPI) declined 0.1% in January and Industrial Production fell 0.6% in January. The mixed data seems to support the Federal Reserve's current pause on its rate path as it seeks to determine what the current market conditions warrant. On Wednesday of last week, the Consumer Price Index (CPI) remained unchanged even with historically strong labor markets. Partly driving this may be energy prices which have fallen for the last three months of 2018. Crude prices did rise last week, though, and are nearing three-month highs. Many Energy and Production companies have announced reduced CAPEX budgets in the first quarter earnings season and market sentiment anticipates this may help crude oil pricing later this year.Major economic reports (related consensus forecasts, prior data) for the upcoming holiday-shortened week include: Wednesday: February 15 MBA Mortgage Applications (N/A, -3.7%); Thursday: February 16 Initial Jobless Claims (229k, 238k), December preliminary Durable Goods Orders (1.7%, 0.7%), February preliminary Markit US Manufacturing PMI (54.9, 54.9), January Leading Index (0.2%, -0.1%) and January Existing Home Sales (5M, 4.99M).
Posted on Tuesday, February 19, 2019 @ 7:57 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.