Market Commentary by Scott J. Brown, Ph.D., Chief Economist
- Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services
In addition to the mostly positive corporate earnings reports this week, the focus fell on Federal Reserve Chairman Ben Bernanke’s monetary policy testimony – before the Senate Banking Committee on Wednesday and in front of the House Financial Services Committee on Thursday. While he didn’t offer anything new in support of the economy, he assured the legislators the Fed remains “prepared to take further policy actions as needed.”
In prepared remarks, Bernanke said the economy is “proceeding at a moderate pace.” On the positive side, he noted that business and household demand is rising, but that housing and commercial construction are weak – and that continuing job market weakness is holding back consumer demand. It will require “a significant amount of time” to recoup the 8.5 million jobs lost in 2008 and 2009, he said, citing the latest Fed projections that show reducing unemployment “is now expected to be somewhat slower than we previously projected.” Unemployment may stand between 7% and 7.5% at the end of 2012, he said.
Next week, watch for reaction to new home sales figures (for June), July’s consumer confidence survey on Tuesday and the release of the latest Fed’s Beige Book on Wednesday. On Friday, the advance estimate on second quarter 2010 gross domestic product (GDP) is due to be released.
Indices
| Last | Last Week | YTD return % | |
| DJIA | 10322.3 | 10359.31 | -1.01% |
| NASDAQ | 2245.89 | 2249.08 | -1.03% |
| S&P 500 | 1093.67 | 1096.48 | -1.92% |
| MSCI EAFE | 1445.68 | 1449.4 | -8.55% |
| Russell 2000 | 635.48 | 634.62 | 1.61% |
Consumer Money Rates
| Last | 1-year ago | |
| Prime Rate | 3.25 | 3.25 |
| Fed Funds | 0.25 | 0.25 |
| 30-year mortgage | 4.61 | 5.35 |
Currencies
| Last | 1-year ago | |
| Dollars per British Pound | 1.526 | 1.647 |
| Dollars per Euro | 1.289 | 1.424 |
| Japanese Yen per Dollar | 87.060 | 93.680 |
| Canadian Dollars per Dollar | 1.037 | 1.098 |
| Mexican Peso per Dollar | 12.759 | 13.216 |
Commodities
| Last | 1-year ago | |
| Crude Oil | 79.03 | 64.25 |
| Gold | 1197.40 | 953.31 |
Bond Rates
| Last | 1-month ago | |
| 2-year treasury | 0.57 | 0.65 |
| 10-year treasury | 2.95 | 3.11 |
| 10-year municipal (TEY) | 4.32 | 4.95 |
Treasury Yield Curve – 7/23/2010
S&P Sector Performance Charts – 7/23/2010
Economic Calendar
| July 26 | — | New Home Sales (June) |
| July 27 | — | Consumer Confidence (July) |
| July 28 | — | Durable Goods Orders (June) Fed Beige Book |
| July 30 | — | Real GDP (2Q10, advance estimate) |
| August 6 | — | Employment Report (July) |
| August 10 | — | FOMC Meeting |
Important Disclosures
Past performance is not a guarantee of future results. There are special risks involved with global investing related to market and currency fluctuations, economic and political instability, and different financial accounting standards. The above material has been obtained from sources considered reliable, but we do not guarantee that it is accurate or complete. There is no assurance that any trends mentioned will continue in the future. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Investing involves risk and investors may incur a profit or a loss.
US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. US government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the US government.
Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments.
Tax Equiv Muni yields (TEY) assume a 35% tax rate on triple-A rated, tax-exempt insured revenue bonds.
Material prepared by Raymond James for use by its financial advisors.
The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Data source: Bloomberg, as of close of business June 10th, 2010.
©2010 Raymond James Financial Services, Inc. member FINRA / SIPC.
