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The Weekly Market Snapshot from Frazier Allen for the week of June 4th, 2012

 

Weekly Market Snapshot

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

Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services

U.S. economic data were mixed, but mostly on the soft side of expectations. The May Employment Report disappointed. Nonfarm payrolls rose by 69,000 (vs. a median forecast of +150,000), while figures for March and April were revised a net 42,000 lower. Private-sector payrolls rose by 82,000 (+800,000 before seasonal adjustment) – a +180,000 average over the last six months and a +165,000 average over the last 12 months.

The government continued to shed jobs. The unemployment rate edged up to 8.2% (from 8.1%), due largely to a pickup in labor force participation (likely noise, although at some point, individuals will return to the labor force when they become more encouraged about job prospects).

The ISM Manufacturing Index slowed in May (still suggesting expansion, but at a slower pace). Consumer confidence weakened. Real GDP rose at a 1.9% in the 2nd estimate for 1Q12 (vs. +2.2% in the advance estimate), with much of the revision due to a smaller inventory build. Personal income and spending figures suggested moderate growth in 2Q12.

Worries about Europe continued to dominate, with U.S. markets reacting to various news and rumors (some positive, some negative). Manufacturing indices for the UK, the euro area, China, and Brazil all suggested contraction. For those looking for a silver lining on Europe, fears have led to a drop in long-term interest rates and a downtrend in prices of energy and other commodities (which should help support U.S. economic growth).

Next week, the economic calendar thins out. However, Fed Chairman Bernanke will testify on “the economic outlook and monetary policy” on Thursday. With just a couple of weeks until the June 19-20 monetary policy meeting, Bernanke’s testimony should be very important for the markets. Fears about Europe are likely to continue.

Indices

  Last Last Week YTD return %
DJIA 12393.45 12529.75 1.44%
NASDAQ 2827.34 2839.38 8.53%
S&P 500 1310.33 1320.68 4.19%
MSCI EAFE 1332.89 1354.40 -5.64%
Russell 2000 761.82 766.57 2.82%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.17 0.11
30-year mortgage 3.74 4.55

Currencies

  Last 1-year ago
Dollars per British Pound 1.537 1.633
Dollars per Euro 1.241 1.433
Japanese Yen per Dollar 78.125 80.951
Canadian Dollars per Dollar 1.040 0.977
Mexican Peso per Dollar 14.319 11.709

Commodities

  Last 1-year ago
Crude Oil 90.41 100.29
Gold 1564.28 1539.83

Bond Rates

  Last 1-month ago
2-year treasury 0.25 0.25
10-year treasury 1.47 1.89
10-year municipal (TEY) 3.06 3.11

Treasury Yield Curve – 6/01/2012

Treasury Yield Curve – 6/01/2012S&P Sector Performance (YTD) – 6/01/2012

S&P Sector Performance (YTD) – 6/01/2012Economic Calendar

June 4th

 —

Factory Orders (April)
June 5th

 —

ISM Non-Manufacturing Index (May)
June 6th

 —

European Central Bank Policy Meeting
Fed Beige Book
June 7th

 —

Bank of England Policy Meeting
Jobless Claims (week ending June 2nd)
Bernanke JEC Testimony (economic outlook and monetary policy)
June 8th

 —

Trade Balance (April)
June 13th

 —

Retail Sales (May)
June 14th

 —

Consumer Price Index (May)
June 15th

 —

Industrial Production (May)
June 17th

 —

Greece Votes
June 20th

 —

FOMC Policy Decision
Bernanke Press Briefing
July 4th

 —

Independence Day (markets closed)
July 6th

 —

Employment Report (June)

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 May 25th, 2012.

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


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