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The Weekly Market Snapshot from Frazier Allen

 

Weekly Market Snapshot

Market Commentary by Scott J. Brown, Ph.D., Chief Economist

Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services

Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services

The economic data calendar was thin. The Fed’s Flow of Funds data showed that household net worth rose $1.2 trillion in Q310 (to $54 trillion), down $10 trillion from 2007. The trade deficit narrowed unexpectedly in October. On 60 Minutes, Fed Chairman Bernanke said that the Fed could extend its asset purchases if conditions warrant.

With no major economic reports, market participants debated the outlook for 2011. President Obama and Republican congressional leaders agreed to a package that would extend the Bush tax cuts for two years, extend unemployment insurance benefits by 13 months, and cut the employee-paid portion of payroll taxes for a year. While many see this as “stimulus,” it’s more of a non-negative (preventing growth from weakening rather than driving it sharply forward). European debt worries continued to simmer, as Europe debated the possible creation of a euro-bond (not backed by specific countries). The fixed-income rout continued (in the U.S. and around the world), sending the 10-year Treasury back to levels last seen in June.

Next week, the economic calendar is packed with a number of potentially market-moving data releases. The focus is expected to be on the retail sales figure for November, but there will also be interest in industrial production and the Consumer Price Index (where core inflation has been trending at very low levels). The Federal Open Market Committee meeting is expected to be a non-event – no change in policy and little change in the wording of the policy statement.

Indices

  Last Last Week YTD return %
DJIA 11370.06 11362.41 9.03%
NASDAQ 2616.67 2579.35 15.31%
S&P 500 1233 1221.53 10.57%
MSCI EAFE 1619.74 1595.08 2.47%
Russell 2000 767.63 751.2 22.74%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.25 0.25
30-year mortgage 4.87 4.99

Currencies

  Last 1-year ago
Dollars per British Pound 1.576 1.621
Dollars per Euro 1.322 1.470
Japanese Yen per Dollar 83.760 87.880
Canadian Dollars per Dollar 1.010 1.056
Mexican Peso per Dollar 12.466 12.968

Commodities

  Last 1-year ago
Crude Oil 88.37 70.67
Gold 1389.30 1126.70

Bond Rates

  Last 1-month ago
2-year treasury 0.61 0.46
10-year treasury 3.26 2.68
10-year municipal (TEY) 4.85 4.15

Treasury Yield Curve – 12/10/2010 

Treasury Yield Curve – 12/10/2010

S&P Sector Performance (YTD) – 12/10/2010 

S&P Sector Performance (YTD) – 12/10/2010

Economic Calendar

December 14th  —  Producer Price Index (November)
Retail Sales (November)
Business Inventories
FOMC Meeting
December 15th  —  Consumer Price Index (November)
Real Earnings (November)
Empire State Manufacturing Index (December)
Industrial Production (November)
Homebuilder Sentiment (December)
December 16th  —  Jobless Claims (week ending December 10th)
Building Permits, Housing Starts (November)
Philly Fed Index (December)
December 17th  —  Leading Economic Indicators (November)
December 22nd  —  Real GDP (3Q10, 3rd estimate)
Existing Home Sales (November)
December 23rd  —  Personal Income, Spending (November)
Durable Goods Orders (November)
Consumer Sentiment (December)
New Home Sales (November)
December 24th  —  Christmas Holiday (markets closed)

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 December 2nd, 2010.

©2010 Raymond James Financial Services, Inc. member FINRA / SIPC.


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