US Economy and Credit Markets Ended Sept. 6, 2019

Long-dated U.S. Treasury yields finished the holiday-shortened week higher as yields on short-term U.S. Treasury bills pulled back. The movement of U.S. Treasury yields last week un-inverted the U.S. Treasury 2-year/10-year yield curve. An inverted yield curve is perceived as a recession indicator.  U.S. Treasury yields pushed higher on the news of trade talks between the United States and China set to resume in October and the better-than-expected ISM Non-Manufacturing data. The ISM Non-Manufacturing Index rose to 56.4 in August, well above consensus estimates of 54.0. Levels above 50 signal expansion. Sixteen of eighteen industries in the ISM Non-Manufacturing Index reported growth, easing recession concerns. On Friday, investors digested a mixed jobs report for the month of August. Top-line data indicated nonfarm payrolls of 130,000 missed consensus estimates of 160,000. Underlying data in the report was more positive. Average hourly wages increased 0.4% in the month, up 3.2% versus August of last year. The unemployment rate remained unchanged for the month because the labor force expanded by 571,000. Additionally, the employment-to-participation ratio reached its highest since 2008 at 60.9%, while the labor force participation rate tied the highest since 2013 at 63.2%. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Tuesday: August NFIB Small Business Optimism (103.5, 104.7); Wednesday: September 6 MBA Mortgage Applications (n/a, -3.1%), August PPI Final Demand MoM ( 0.1%, 0.2%), August PPI Final Demand YoY ( 1.8%, 1.7%), July Final Wholesale Inventories MoM (0.2%, 0.2%); Thursday: August CPI MoM (0.1%, 0.3%), August CPI YoY (1.8%, 1.8%), September 7 Initial Jobless Claims (215k, 217k), August 31 Continuing Claims (n/a, 1662k), August Monthly Budget Statement (-$161.0b, -$119.7b); Friday: August Retail Sales Advance MoM (0.2%, 0.7%), September Preliminary University of Michigan Sentiment (90.5, 89.87).
Posted on Monday, September 9, 2019 @ 7:32 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.