US Economy and Credit Markets Ended Jan. 3, 2020
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The last day of the year ended with the Two-year/Ten-year U.S. Treasury yield curve, a commonly used recession indicator, steepening to its widest point since October of 2018. Improvement in sentiment surrounding the phase-one trade deal between the United States and China contributed to the yield curve steepening. The week ended with U.S. Treasury yields falling as investors sought out haven assets amid tensions with Iran and weaker-than-expected manufacturing data. Iran vowed retaliation in response to the airstrikes by U.S. military forces early Friday morning. Crude oil and gold prices spiked on headlines as well. The ISM Manufacturing Index, which is a survey, missed the consensus expectation of 49.0. The survey level of 47.2 is lowest level since June of 2009. The slowdown in activity was largely due to the decrease in the new orders index and production index from November to December. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: December Final Markit US Services PMI (52.2, 52.2.), December Final Markit US Composite PMI (n/a, 52.2.); Tuesday: November Trade Balance (-$44.5b, -$47.2b), December ISM Non-Manufacturing Index (54.5, 53.9), November Factory Orders (-0.6%, 0.3%), November Final Durable Goods Orders (n/a, -2.0%), November Final Durables Ex Transportation (n/a, 0.0%); Wednesday: January 3 MBA Mortgage Applications (n/a, -5.3%), December ADP Employment Change (160k, 67k); Thursday: January 4 Initial Jobless Claims (221k, 222k), December 28 Continuing Claims (n/a, 1728k), January 5 Bloomberg Consumer Comfort (n/a, 63.9); Friday: December Change in Nonfarm Payrolls (158k, 266k), December in Private Payrolls (150k, 254k), December Change in Manufacturing Payrolls (5k, 54k), November Final Wholesale Inventories MoM (n/a, 0.0%).
Posted on Monday, January 6, 2020 @ 8:49 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.