US Economy and Credit Markets Ended August 14, 2020
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Treasury yields rose across the yield curve last week, with longer-term yields rising more than shorter-term yields, as new supply and a continued rebound in consumer spending led to selling in the Treasury market throughout the week. In the corporate market, aluminum-can maker Ball Corp. issued $1.3 billion of 10-year debt at a record-low yield of 2.875% for a junk bond with a maturity of five years or longer. The deal highlights a rally in credit markets that has pushed corporate borrowing costs for both investment-grade and junk-rated firms near record lows. Jobs data showed initial jobless claims in the week ended August 8 fell below one million for the first time since March, an encouraging sign that the labor market continues to recover. Continued claims, or the number of people receiving unemployment benefits, fell to about 15.5 million in the week ending August 1, which is still staggeringly high but marks another step forward in the recovery from May's peak of almost 25 million. Meanwhile, retail sales rose 1.2% in July over the prior month, exceeding pre-pandemic levels to set a new all-time high. It was the third consecutive month of retail sales growth. Compared to July 2019, retail sales were up 2.7% last month, which was the second consecutive month that retail sales were higher than last year. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: August Empire Manufacturing (15.0, 17.2); Tuesday: July Housing Starts (1,240k, 1,186k); Wednesday: August 14 MBA Mortgage Applications (N/A, 6.8%); Thursday: August 15 Initial Jobless Claims (925k, 963k); July Leading Index (1.0%, 2.0%); Friday: August Preliminary Markit US Manufacturing PMI (52.0, 50.9), July Existing Home Sales (5.40m, 4.72m).
Posted on Monday, August 17, 2020 @ 8:18 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.