US Economy and Credit Markets Ended Oct. 18, 2019
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The short end of the yield curve declined last week as futures increasingly price in expectations for a rate cut at the next Federal Reserve meeting and the U.S. and China reached a near term cease-fire concerning further tariffs. Also helping investor sentiment, which reduced demand for safe-assets, was an EU and U.K. agreement which will go to Parliament for a vote. Richard Clarida, Federal Reserve Vice Chairman, spoke on Friday just prior to the quiet period the Federal Reserve observes before its upcoming meeting. He discussed the strength of the US economy noting a favorable outlook but with evident risks. He observed that the U.S. consumer is in good shape but took a more negative view of the global economy seeing disinflationary pressures on U.S. inflation conditions as global growth estimates continue to be negative. Last Wednesday, domestic retail sales fell in September for the first time in seven months. On Thursday, both domestic industrial production and housing starts were recorded as falling in September. GM had a strike but nearly all major manufacturing categories showed declines. Altogether, the reports are seen increasing the probability the Federal Reserve will move to loosen monetary conditions next week. Major economic reports (related consensus forecasts, prior data) for the upcoming week include: Tuesday: September Existing Home Sales (5.45M, 5.49M); Wednesday: Prior week MBA Mortgage Applications (N/A, 0.5%), prior week Initial Jobless Claims (215K, 214K), October preliminary Markit US Manufacturing PMI (50.7, 51.1) and September New Home Sales (703K, 713K); Friday: October final University of Michigan Sentiment (96.0, unch.).
Posted on Monday, October 21, 2019 @ 8:12 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.