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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
Market Commentary by Scott J. Brown, Ph.D., Chief Economist
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.
|Last||Last Week||YTD return %|
|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|
|10-year municipal (TEY)||2.95||3.52|
|Homebuilder Sentiment (December)|
|Building Permits, Housing Starts (November)|
|Existing Home Sales (November)|
|Real GDP (3Q11, 3rd estimate)
Consumer Sentiment (December)
Leading Economic Indicators (November)
|Personal Income and Spending (November)
Durable Goods Orders (November)
New Home Sales (November)
|Christmas Holiday (markets closed)|
|Consumer Confidence (December)|
|New Year’s Holiday, observed (markets closed)|
|Employment Report (December)|
|FOMC Policy Meeting|
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.
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.
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