The Weekly Market Snapshot from Frazier Allen for the week of May 27th, 2012

By Frazier Allen | May 27, 2012 |

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

The news out of Europe remained bleak. G-8 leaders committed “to take all necessary steps” to strengthen and reinvigorate their economies, but recognized that “the right measures are not the same for each of us.” A few days later, European Union leaders could not agree on a course of action. Manufacturing sentiment surveys were weak in China and the eurozone (including France and Germany).

How much bad news (about Europe) is factored in? Apparently a lot. The markets reacted only briefly and modestly to Europe’s bad news, although there was plenty of intraday volatility along the way.

The U.S. economic calendar was relatively thin, with improvement in both new and existing home sales, but disappointing figures on durable goods orders. Consumer sentiment improved (for the ninth consecutive month) to its highest level since October 2007, largely due to more favorable job and wage prospects.

Next week, the economic calendar picks up again, with a number of potentially market-moving data releases. The focus is expected to be on Friday’s employment figures. After some weather-related distortions in recent months, nonfarm payrolls are expected to have risen at a moderately strong pace in May (watch for revisions to March and April). Most of the other data reports are likely to be overshadowed by the job market data, but should be consistent with moderate economic growth in the near term. Europe will remain an important issue for U.S. investors, but worries may temporarily take a back seat to the economic data reports.

Indices

	Last	Last Week	YTD return %
DJIA	12529.75	12442.49	2.56%
NASDAQ	2839.38	2813.69	8.99%
S&P 500	1320.68	1304.86	5.02%
MSCI EAFE	1354.40	1378.79	-4.12%
Russell 2000	766.57	754.33	3.46%

Consumer Money Rates

	Last	1-year ago
Prime Rate	3.25	3.25
Fed Funds	0.17	0.10
30-year mortgage	3.82	4.59

Currencies

	Last	1-year ago
Dollars per British Pound	1.587	1.618
Dollars per Euro	1.255	1.409
Japanese Yen per Dollar	79.490	82.070
Canadian Dollars per Dollar	1.028	0.978
Mexican Peso per Dollar	14.062	11.703

Commodities

	Last	1-year ago
Crude Oil	90.41	99.09
Gold	1564.28	1521.18

Bond Rates

	Last	1-month ago
2-year treasury	0.29	0.33
10-year treasury	1.75	2.15
10-year municipal (TEY)	3.06	3.14

Treasury Yield Curve – 5/25/2012

S&P Sector Performance (YTD) – 5/25/2012

Economic Calendar

May 28th	—	Memorial Day Holiday (markets closed)
May 29th	—	S&P/Case-Shiller Home Price Index (March) Consumer Confidence (May)
May 30th	—	ADP Payroll Estimate (May) Pending Home Sales Index (April)
May 31st	—	Jobless Claims (week ending May 26th) Real GDP (1Q12, 2nd estimate) Chicago PM Index (May)
June 1st	—	Employment Report (May) Personal Income and Spending (April) Markit US PMI (May)
June 20th	—	FOMC Policy Decision Bernanke Press Briefing

Important Disclosures

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 May 25th, 2012.

©2012 Raymond James Financial Services, Inc. member FINRA / SIPC.

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