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Market Commentary by Scott J. Brown, Ph.D., Chief Economist
Europe remained a key concern for U.S. investors. Spain’s debt auction went better than feared. Global investors expressed some concerns about France’s election (first round on April 22nd, second round on May 6th). In its World Economic Outlook, the IMF revised its outlook for global growth slightly higher, but cautioned that “recent improvements are very fragile.”
The U.S. economic data were mixed. Retail sales were stronger than expected in March. Existing home sales and industrial production were weaker than anticipated. Residential construction figures were mixed (permits up, starts down), but first quarter figures were stronger than a year ago (likely aided by a mild winter). Weekly jobless claims were higher than expected, but seasonal adjustment at the start of the quarter is difficult, making recent figures appear suspect.
Next week, the focus is expected to be on the Fed policy meeting, although earnings reports, European developments, and Friday’s GDP Report will likely have some influence on the markets. No monetary policy changes are expected following the Federal Open Market Committee – no change in rates, no change in the conditional commitment to keep rates exceptionally low into late 2014, and no further asset purchase plans (QE3).
Fed officials will revise their forecasts of growth, unemployment and inflation, as well as the expected date that the Fed will start raising the federal funds rate target. Real GDP is expected to have risen at close to a 2.6% annual rate, although there is always a lot of uncertainty in the advance estimate (inventories and net exports account for a small part of GDP, but a disproportional amount of the quarterly variation of GDP growth).
Consumer Money Rates
Treasury Yield Curve – 4/20/2012
S&P Sector Performance (YTD) – 4/20/2012
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 April 19th, 2012.
TopicsCapacity Utilization, Consumer Price Index, Economic Data, European Debt, Federal Open Market Committee, Financial Markets, Frazier Allen, Global Equity Markets, Gross Domestic Product, Index of Leading Economic Indicators, Manufacturing Output, Raymond James, Raymond James Investment Services, Scott J. Brown, Seasonal Adjustment, Short-Term Interest Rates, Volatility, Weekly Market Snapshot
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