US Economy and Credit Markets Ended May 22, 2020
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Treasury yields rose slightly over the course of the week on positive news on the development of a vaccine. On Monday, drug maker Moderna announced the completion of a phase-one clinical trial of their COVID-19 vaccine with positive results. This caused Treasury yields to have their largest daily surge in two months on Monday as investors took a risk-on approach. Also contributing to Monday's rally were comments by Federal Reserve Bank Chairman Jerome Powell. He said that the central bank still had ammunition and that there was no limit to what the Fed could do to lend money to the financial markets. However, yields dropped on Tuesday when Powell tempered his remarks in testimony to the Senate Banking committee and there were questions as to if there were sufficient data on the Moderna vaccine. Yields were flat on Wednesday and Thursday as the Treasury department held its first sale of 20-year bonds since 1986. Investors continued to seek the perceived safety of Treasurys on Friday as tensions between the U.S. and China picked up. The U.S. Congress introduced a bill that would prevent Chinese companies from listing on U.S. exchanges, requiring them to show they are not owned or controlled by a foreign government. Oil prices rose 13% over the week on ongoing output cuts and increased demand for fuel. Major economic reports (related consensus forecasts, prior data) for the upcoming holiday-shortened week include: Tuesday: May Conf. Board Consumer Confidence (87.3, 86.9), April New Home Sales (493k, 627k); Wednesday: May 22 MBA Mortgage Applications (n/a, -2.6%); Thursday: 1Q S Annualized GDP QoQ (-4.8%, -4.8%), April Prelim. Durable Goods Orders (-18.0%, -14.7%), May 23 Initial Jobless Claims (2000k, 2438k); Friday: April Prelim. Wholesale Inventories (-0.7%m -0.8%), April Personal Income (-6.5%, -2.0%), April Personal Spending (-12.8%, -7.5%), May MNI Chicago PMI (40.0, 35.4), May Final U. of Mich. Sentiment (74.0, 73.7).
Posted on Tuesday, May 26, 2020 @ 9:02 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.