US Economy and Credit Markets Week Ended May 18, 2012
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Yields for treasuries rose broadly this week, particularly at longer durations, as speculation surrounding the potential of a Greek exit from the Eurozone weighed on stocks and investors sought safety in government debt. Treasuries rose Monday as leaders in Greece prepared for additional talks on forming a government and investors sold risk based assets. The rise continued on Tuesday with the 10 year yield touching a record low for the year as April Advance Retail Sales were flat (.1%), May Empire Manufacturing exceeded expectations (17.09 vs. 9), March Business Inventories missed expectations (.3% vs. .5% consensus), and the April Consumer Price Index was flat (.2%). Minutes from The Federal Reserve said on Wednesday that additional economic stimulus might be needed to sustain the economy, contributing to a rally in 5 and 10 year government notes. In addition, April Housing starts rose 2.6% to 717,000 vs. expectations of 685,000 while April Capacity Utilization was 79.2%, just beating a 79% estimate. On Thursday, the May Philadelphia Fed Index fell to -5.8 vs. an estimate of 10 and treasuries yields touched record lows not seen since last September. The drop continued on Friday with yields closing lower, marking the 9th consecutive week of gains for the treasury markets. Major economic reports (and related consensus forecasts) for next week include: Tuesday: April Existing Home Sales (4.62%); Wednesday: March House Price Index (.3%), April New Home Sales (335K); Thursday: Durable Goods Orders (.3%) and Durable Good Ex Transportation (.8%); Friday: Final U. of Michigan Consumer Confidence for May (77.8).
Posted on Monday, May 21, 2012 @ 9:01 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.