Written by Sarah Conwell, Portfolio Manager
Headlines of the Week
- Fed’s Powell to Give Virtual Remarks at Jackson Hole Gathering
- Biggest Tax Hike on Wealthy Since ‘93 Is Bogged Down in U.S. Congress
The US Treasury yield curve bull flattened in the week as investors and analysts tempered their expectations for near-term growth in the United States following the apparent resurgence of Covid-19, vis-à-vis the Delta variant.
Retail Sales, released on Tuesday, fell short of expectations and came in at a -1.1% decline in July. When factoring in the current rates of inflation, real spending fell an even greater amount. The largest impact on sales came from the auto sector, with demand outpacing supply and the subsequent increase in prices taking their toll on auto sales as a whole (Retail Sales excluding autos fell -0.4%). Interestingly, there was a 1.4% increase in manufacturing production in the month and a remarkable 11.2% increase in auto output was included in that increase. At this point, it appears supply can’t hardly keep up with demand in the sector.
Initial Jobless Claims fell again this week and now stand at 348k, the lowest print since March of 2020. As you can see in this week’s Chart of the Week, claims have been on a steady decline of late after moderating early on in the recovery. With the Federal Reserve’s dual mandate of full employment and stable prices, the improvement in jobless claims is an encouraging sign for the overall health of the economy.
Next week, the Markit PMI is released on Monday, Durable Goods on Wednesday, GDP and PCE on Thursday, and the PCE Deflator will be released on Friday.
Chart of the Week
Source: Bloomberg, LLC
As of: 8/20/2021
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Disclosures
Indexes used for AAA Municipal Yields
2 Year: BVAL Municipal AAA Yield Curve (Callable) 2 Year (Symbol: CAAA02YR BVLI)
5 Year: BVAL Municipal AAA Yield Curve (Callable) 5 Year (Symbol: CAAA04YR BVLI)
10 Year: BVAL Municipal AAA Yield Curve (Callable) 10 Year (Symbol: CAAA10YR BVLI)
30 Year: BVAL Municipal AAA Yield Curve (Callable) 30 Year (Symbol: CAAA30YR BVLI)
Indexes used for US Treasury Yields
2 Year: US Generic Govt 2 Year Yield (Symbol: USGG2YR)
5 Year: US Generic Govt 5 Year Yield (Symbol: USGG5YR)
10 Year: US Generic Govt 10 Year Yield (Symbol: USGG10YR)
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