US Economy and Credit Markets Ended Jan. 17, 2020
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On Thursday of last week, the U.S. Treasury department announced that it intends to issue 20-year nominal coupon bonds in the second half of this year. Increasing government debt levels necessitate that the Treasury department review options for additional funding. While the Treasury department has not indicated an interest in adding ultra-long dated maturities, such as a 50 or 100-year issuance, it is actively exploring the possibility. It believes that 20-year bonds can help increase the length of outstanding debt but within the current term structure. Short-dated yields rose last week as strong economic data decreased interest in safe assets. In particular, Friday's Housing Starts data showed a nearly 17% increase in December was well ahead of expectations. All regions registered a gain for the month amid broad based builder activity. Also last week we saw consumer prices and producer prices rise for the month of December. December Retail Sales were up 0.3% which was in-line with expectations with only autos registering a decline. This was the largest monthly gain since 2016. Oil continued to decline last week as the U.S. and Iranian hostilities did not continue to escalate. Major economic reports (related consensus forecasts, prior data) for the upcoming holiday-shortened week include Wednesday: January 17 MBA Mortgage Applications (N/A, 30.2%) and December Existing Home Sales (5.43M, 5.35M); Thursday: January 18 Initial Jobless Claims (214k, 204k), December Leading Index (-0.2%, 0.0%); Friday: Markit January preliminary US Manufacturing PMI (52.5, 52.4).
Posted on Tuesday, January 21, 2020 @ 7:56 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.