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The Weekly Market Snapshot from Frazier Allen for the week of December 18th

Posted By Frazier Allen On Sunday, December 18, 2011 @ 10:00 am In Business | No Comments

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 were mixed, but stock market participants were generally willing to embrace the good news and ignore the bad. Retail sales rose less than expected in November, but previous figures were revised higher, making it about a wash. The Fed’s regional manufacturing surveys (New York and Philadelphia) were stronger than expected in December, but these surveys don’t measure actual activity.

Industrial production weakened last month and results varied across industries. Initial claims for unemployment insurance benefits fell further, but seasonal adjustment is difficult, making the numbers suspect in December. The Consumer Price Index was flat, up 0.2% ex-food & energy, moderating in recent months after stronger gains earlier this year. Pipeline inflation pressures continued to recede.

Views about Europe remained unanchored. Italy’s 10-year yield, a key indicator of stress in Europe, which had fallen last week, headed higher again. In the U.S., Congress reached an agreement on a budget for the current fiscal year, averting a government shutdown, and also made progress on extending unemployment insurance benefits and the payroll tax reduction. The 10-year Treasury yield fell below 1.85% in Friday, suggesting more concern about downside economic risks.

Next week, the data focus will be on the housing sector. November figures really aren’t all that critical, but seasonal adjustment could add some noise. The National Association of Realtors will benchmark lower existing home sales back to 2007 (that is, sales have been overestimated in the last few years, as many had suspected). The third estimate of 3Q11 GDP growth may be revised slightly higher. Friday’s personal income and spending figures for November will help fill in the GDP picture for 4Q11. Europe is expected to remain an important concern for U.S. investors.

Indices

  Last Last Week YTD return %
DJIA 11868.81 11997.70 2.52%
NASDAQ 2541.01 2596.38 -4.22%
S&P 500 1215.75 1234.35 -3.33%
MSCI EAFE 1368.46 1421.67 -17.48%
Russell 2000 716.01 722.68 -8.63%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.07 0.22
30-year mortgage 3.93 5.19

Currencies

  Last 1-year ago
Dollars per British Pound 1.549 1.557
Dollars per Euro 1.301 1.328
Japanese Yen per Dollar 77.880 84.030
Canadian Dollars per Dollar 1.034 1.000
Mexican Peso per Dollar 13.856 12.414

Commodities

  Last 1-year ago
Crude Oil 93.87 88.62
Gold 1570.95 1386.38

Bond Rates

  Last 1-month ago
2-year treasury 0.23 0.27
10-year treasury 1.91 2.02
10-year municipal (TEY) 2.95 3.52

Treasury Yield Curve – 12/16/2011

Treasury Yield Curve – 12/16/2011

S&P Sector Performance (YTD) – 12/16/2011

 S&P Sector Performance (YTD) – 12/16/2011

Economic Calendar

 
December 19th

 — 

Homebuilder Sentiment (December)
December 20th

 — 

Building Permits, Housing Starts (November)
December 21st

 — 

Existing Home Sales (November)
December 22nd

 — 

Real GDP (3Q11, 3rd estimate)
Consumer Sentiment (December)
Leading Economic Indicators (November)
December 23rd

 — 

Personal Income and Spending (November)
Durable Goods Orders (November)
New Home Sales (November)
December 26th

 — 

Christmas Holiday (markets closed)
December 27th

 — 

Consumer Confidence (December)
January 2nd

 — 

New Year’s Holiday, observed (markets closed)
January 6th

 — 

Employment Report (December)
January 24th-25th

 — 

FOMC Policy 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.

[1]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 15th, 2011.

©2011 Raymond James Financial Services, Inc. member FINRA [2] / SIPC [3].


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