The Weekly Market Snapshot from Frazier Allen for the week of September 30th, 2012

By Frazier Allen | September 30, 2012 |

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

The economic data were mixed, but mostly disappointing. Consumer confidence improved in September and the Case-Shiller Home Price Index continued to rise. Real GDP rose at a 1.3% annual rate in the 3^rd estimate for 2Q12 (vs. +1.7% in the 2^nd estimate). Personal income rose 0.1% in August (+3.5% y/y). Spending rose 0.5%, but gasoline accounted for about 80% of that. The PCE Price Index rose 0.4% (+1.5% y/y), up 0.1% ex-food & energy (+1.6% y/y) – trending below the Fed’s 2% target. Durable goods orders plunged 13.2%, partly reflecting a drop in civilian aircraft orders (which went negative due to order cancelations).

However, ex-transportation, orders fell while revisions showed a larger drop in July. Shipments fell. Ex-transportation, unfilled orders fell for the third consecutive month (not a good sign). Inventory growth was faster in the first two months of the quarter (likely unintentional).

The financial market reactions to the data were somewhat disjointed. Investors also kept an eye on developments in Europe.

Next week, the economic calendar remains busy. The ISM Manufacturing Index is likely to set the tone for the week. With Obama moving ahead in recent polls of the key battleground states, the presidential debates will be critical for Romney’s campaign. The topic for Wednesday night’s debate is domestic policy. The financial markets are unlikely to respond much to what’s said. The Employment Report should be the week’s highlight. The Chicago teachers strike is expected to have no impact on nonfarm payrolls. Otherwise, expect “more of the same” – that is, moderate job growth, but not especially strong.

Indices

Consumer Money Rates

Currencies

Commodities

Bond Rates

Treasury Yield Curve – 9/28/2012

S&P Sector Performance (YTD) – 9/28/2012

Economic Calendar

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 September 20th, 2012.

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

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