US Economy and Credit Markets Ended Nov. 12, 2021
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Treasury yields rose significantly over the course of the week on the passing of the infrastructure plan and inflation concerns. Over the previous weekend, the U.S. House of Representatives approved an infrastructure package already approved by the Senate that went on to President Biden to be signed into law. This caused traders to seek a more risk on approach on Monday, as yields rose materially. Yields reversed themselves and dropped on Tuesday, despite U.S. wholesale inflation rising in October. Federal Reserve Chairman Jerome Powell had said the previous week that the Fed would be patient about raising interest rates, so investors shrugged off inflation concerns on Tuesday. However, those concerns were realized further on Wednesday as inflation surged 0.9% MoM and 6.2% YoY, compared to estimates of 0.6% and 5.9%, respectively. Investors were not as sure that the Fed would be able to hold off a rate hike for as long as they expect as the chance of a rate hike by next June rose from 55% to 77% in one day, and yields soared. Yields rose materially again on Friday with the University of Michigan Consumer-Sentiment Index coming in at 66.8, compared to expectations of 72.5, the lowest since 2011. Major economic reports (related consensus forecasts, prior data) for the upcoming week include Monday: November Empire Manufacturing (21.2, 19.8); Tuesday: October Retail Sales Advance MoM (1.1%, 0.7%), October Industrial Production MoM (0.9%, -1.3%); Wednesday: November 12 MBA Mortgage Applications (n/a, 5.5%), October Housing Starts (1580k, 1555k); Thursday: November 13 Initial Jobless Claims (260k, 267k), October Leading Index (0.8%, 0.2%).
Posted on Monday, November 15, 2021 @ 8:09 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.