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The Weekly Market Snapshot from Frazier Allen for the week of December 26th

Posted By Frazier Allen On Monday, December 26, 2011 @ 12:00 pm 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. Real GDP growth rose at a 1.8% annual rate in 3Q11 (revised down from +2.5% in the advance estimate and +2.0% in the 2nd estimate), with a downward revision to consumer spending growth. Personal income and spending rose modestly in November. Inflation–adjusted consumer spending (70% of GDP) appears to remain on track for a 2.5% to 3.0% annual pace in 4Q11. However, real disposable income was down 0.1% from a year ago. Residential construction and new home sales improved, helped by the seasonal adjustment.

Jobless claims continued to trend at a moderately low level, reflecting fewer-than-normal seasonal layoffs in manufacturing and construction. Existing home sales rose 4.0% in November, but benchmark revisions significantly reduced the level of reported sales back to 2007. Congress finally got around to extending unemployment insurance benefits and the payroll tax reduction, but only for two months.

The European Central Bank saw strong demand for its Long-Term Refinancing Operation (which allows banks to borrow for up to three years at the overnight rate). The influx of liquidity should help ease strains within Europe’s banking system, but didn’t do much for long-term interest rates. The Italian 10-year yield again flirted with 7%, a level which casts doubt about the country’s ability to roll over its existing debt.

Next week, market activity should be relatively quiet between the holidays. The consumer confidence figure could have some impact if we get a surprise. The calendar will heat up again in the first week of the new year, with a renewed focus on the job market (seasonal adjustment may make the payroll numbers look better than they really are).


  Last Last Week YTD return %
DJIA 12169.65 11868.81 5.11%
NASDAQ 2599.45 2541.01 -2.01%
S&P 500 1254.00 1215.75 -0.29%
MSCI EAFE 1393.43 1368.46 -15.97%
Russell 2000 745.51 716.01 -4.87%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.07 0.21
30-year mortgage 3.94 4.96


  Last 1-year ago
Dollars per British Pound 1.567 1.537
Dollars per Euro 1.305 1.309
Japanese Yen per Dollar 78.160 83.580
Canadian Dollars per Dollar 1.021 1.014
Mexican Peso per Dollar 13.818 12.314


  Last 1-year ago
Crude Oil 99.48 89.83
Gold 1606.62 1387.33

Bond Rates

  Last 1-month ago
2-year treasury 0.28 0.27
10-year treasury 2.00 1.95
10-year municipal (TEY) 2.90 3.43

Treasury Yield Curve – 12/23/2011

Treasury Yield Curve – 12/23/2011

S&P Sector Performance (YTD) – 12/23/2011

Treasury Yield Curve – 12/23/2011

Economic Calendar

December 26th


Christmas Holiday (markets closed)
December 27th


S&P/Case-Shiller Home Prices (October)
Consumer Confidence (December)
December 28th


Jobless Claims (week ending December 24th)
Chicago Purchasing Managers Index (December)
Pending Home Sales Index (November)
January 2nd


New Year’s Holiday, observed (markets closed)
January 3rd


ISM Manufacturing Index (December)
FOMC Minutes (December 13th)
January 5th


ISM Non-Manufacturing Index (December)
January 6th


Employment Report (December)
January 16th


Dr. Martin Luther King, Jr. Holiday (markets closed)
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.

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 22nd, 2011.

©2011 Raymond James Financial Services, Inc. member FINRA [1] / SIPC [2].

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