US Economy and Credit Markets Ended Aug 23, 2019
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Short-term Treasury yields rose moderately while long-term Treasury yields dropped moderately over the course of the week on talks of monetary policy and increased trade tensions between the United States and China. On Monday, yields rose across all durations on reports that Germany may uses fiscal stimulus if its economy slowed. Long term yields dropped on Tuesday as President Donald Trump called for the Federal Reserve to be more aggressive with interest rate cuts and advocated for payroll tax cuts. The Fed's minutes from the July meeting released on Wednesday showed that the central bank wasn't ready to commit to additional rate cuts, causing Treasury yields to climb again. Yields continued to rise Thursday as several regional Fed Presidents said they did not support further rate cuts. On Friday, Treasury yields dropped significantly as China's finance ministry said it would impose tariffs on $75 billion of U.S. goods and President Trump responded with several harsh tweets toward China, urging U.S. businesses to leave China.; The market implied probability of a rate cut at the September 18th meeting remained at 100% this week, but the probability of the Fed cutting the upper bound of interest rates from 2.25 all the way down to 1.75 decreased from 33% to 17%. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Monday: July Prelim. Durable Goods Orders (1.1%, 1.9%); Tuesday: August Conf. Board Consumer Confidence (130.0, 135.7); Wednesday: August 23 MBA Mortgage Applications (n/a, -0.9%); Thursday: 2Q S Annualized GDP QoQ, (2.0%, 2.1%), July Prelim. Wholesale Inventories MoM (n/a, -0.1%), August 24 Initial Jobless Claims (215k, 209k); Friday: July Personal Income (0.3%, 0.4%), July Personal Spending (0.5%, 0.3%), August MNI Chicago PMI (48.0, 44.4), August Final U. of Mich. Sentiment (92.5, 92.1).
Posted on Monday, August 26, 2019 @ 8:23 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.