US Economy and Credit Markets Ended March 11, 2022
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Yields rose across the curve last week with the middle of the curve witnessing the most dramatic jumps. The Russian military continued its march towards Kyiv with neither side offering concessions during peace talks. Fears of exacerbated supply chains, energy supply shocks, and the fallout of sanctions mount as the war persists sending U.S. inflation breakevens higher with yields. Commodity prices also rattled markets last week. Oil closed 14% lower from intraweek highs while nickel and uranium prices skyrocketed. Persistent inflation and the rally in commodity prices drove U.S. consumer sentiment to 10-year lows increasing stagflation concerns. Next week, all eyes will be on the Federal Reserve committee who will meet Wednesday and are likely to raise the Federal Funds rate 25bps. The market will scrutinize Chairman Powell's comments on inflation expectations, consumer strength, and the remaining rate hike path for 2022. The futures market is pricing in nearly seven rate hikes this year, up from three at the end of 2021.  Major economic reports (related consensus forecasts, prior data) for the upcoming week include Tuesday: March Empire Manufacturing (7.0, 3.1), February PPI Final Demand MoM (0.9%, 1.0%); Wednesday: March 16 FOMC Rate Decision (Upper Bound) (0.50%, 0.25%), March 11 MBA Mortgage Applications (N/A, 8.5%), February Retail Sales Advance MoM (0.4%, 3.8%); Thursday: March 12 Initial Jobless Claims (221k, 227k), February Housing Starts (1700k, 1638k), February Industrial Production MoM (0.5%, 1.4%); Friday: February Existing Home Sales (6.14m, 6.50m), February Leading Index (0.3%,-0.3%).
Posted on Monday, March 14, 2022 @ 8:21 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.