US Economy and Credit Markets Ended Aug 2, 2019
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Yields continued to fall during a busy week that included an interest rate cut, an escalation in the trade war between the U.S. and China, and new jobs data. On Wednesday, the Fed cut rates by 0.25%, citing weak global growth, trade uncertainty, and soft inflation. However, given the absence of economic weakness in the U.S., Fed Chairman Jerome Powell called the move a "midcycle adjustment" as opposed to a long series of rate cuts. Despite Chair Powell's comments, the market still widely expects the Fed to cut rates again at its next meeting in September. Bonds surged on Thursday, with the yield on the benchmark U.S. 10-year Treasury note falling below 2% to its lowest level since November 2016, after President Donald Trump announced that he would impose a 10% tariff on $300 billion in additional Chinese imports beginning September 1. Meanwhile, economic data released Friday showed jobs gains remained solid as the U.S. economy added 164,000 jobs in July, which was about in line with expectations. Additionally, the unemployment rate held at 3.7% and average hourly earnings were up 3.2% over the prior year. The July gain marked 106 consecutive months the U.S. economy has added jobs. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Wednesday: August 2 MBA Mortgage Applications (N/A, -1.4%); Thursday: August 3 Initial Jobless Claims (215k, 215k), June Final Wholesale Inventories MoM (0.2%, 0.2%); Friday: July PPI Final Demand MoM (0.2%, 0.1%).  
Posted on Monday, August 5, 2019 @ 8:19 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.