US Economy and Credit Markets Ended May 3, 2019

Last week's FOMC statement cited continued strength in the labor market and a low unemployment rate but growth in household spending and business fixed investment was seen slowing in Q1 2019. Much was made of the statement's comment on weak overall inflation which, on a 12-month basis, has declined below 2 percent. In keeping with the dual mandate of high employment and price stability, there was no change to the target range for federal funds. The committee committed to being patient in adjusting the target range while it assesses realized and expected economic conditions. The FOMC also unanimously voted to set the interest rate paid on required and excess reserve balances at 2.35 percent effective May 2, 2019 – 15 basis points below the top target range for the federal funds rate. On Friday of last week, the ISM non-manufacturing index declined to 55.5 in April as activity in the service sector continues to register growth. Last week's nonfarm payroll data was seen rising 263,000 for April easily outpacing consensus expectations. Continued job gains have lowered the unemployment rate to 3.6%, a level not registered since 1969. Internationally, as the U.K. continues to struggle implementing any potential Brexit both the Labor and ruling Conservative parties suffered in the U.K.'s local elections last week. Conservatives lost 1,211 seats and Labour, expecting to be the beneficiary, lost 81 seats as the Liberal Democrats gained 636 seats. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Wednesday: May 3 MBA Mortgage Applications (n/a, -4.3%); Thursday: April final PPI Demand (0.2%, 0.6%), March Trade Balance (-$51.1B, -$49.4B) and May 4 Initial Jobless Claims (220K, 230K); Friday: March final Wholesale Inventories (n/a, 0.0%) and April CPI (0.4%, unch.).
Posted on Monday, May 6, 2019 @ 8:24 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.