US Economy and Credit Markets Ended July 24, 2020
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Treasury yields dropped over the course of the week on increased geopolitical tensions between the United States and China, along with disappointing economic data. Yields started the week higher as positive trial results showed that progress is being made toward a vaccine, and on expectations of stimulus packages in the U.S. and EU. However, the U.S. State Department told China to close its Houston consulate on Wednesday in an attempt to protect American intellectual property and private information. China's Foreign Ministry spokesperson pledged retaliation if this path was continued saying that this was unprecedented escalation. On Thursday, the U.S. Secretary of State called on foreign governments to join the U.S. in confronting China, and China then ordered the U.S. to close its consulate in Chengdu. These geopolitical tensions caused yields to fall as investors began to seek the perceived safety of Treasurys. On Thursday, initial jobless claims rose by 109,000 to 1.416 million, suggesting that the economic recovery has slowed with the recent increase in Coronavirus cases and corresponding social distancing measures. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: June Prelim. Durable Goods Orders (7.2%, 15.7%); Tuesday: July Conf. Board Consumer Confidence (94.5, 98.1); Wednesday: July 24 MBA Mortgage Applications (n/a, 4.1%), June Prelim. Wholesale Inventories MoM (n/a, -1.2%), July 29 FOMC Rate Decisions Upper Bound (0.25%); Thursday: 2Q GDP Annualized QoQ (-35%, -5%), July 25 Initial Jobless Claims (1410k, 1416k); Friday: June Personal Income (-0.7%, -4.2%), June Personal Spending (5.3%, 8.2%), July MNI Chicago PMI (44.5, 36.6), July Final U. of Michigan Sentiment (72.8, 73.2).
Posted on Monday, July 27, 2020 @ 8:02 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.