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Weekly Market Snapshot from Frazier Allen for the week of January 30th, 2013

Posted By Frazier Allen On Wednesday, January 30, 2013 @ 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 ServicesThe House voted to delay the need for a debt ceiling increase by three months, to May 19. Congress has not had a real budget since 2009, funding the government through a series of stopgap measures (Continuing Resolutions). This week, Congress set a goal to have a real budget by April 15th, or lawmakers won’t get paid. Actually, they’ll still get paid eventually.

Oh, and the House and Senate only have to come up with a budget that can be approved by one chamber. They don’t have to have a set of budget bills that can be approved by both chambers (that is, something that could be sent to the president and signed into law). Spending cuts are still slated to kick in on March 1st, with about half of that in defense.It was a very quiet week for economic data. The stock market watched earnings reports. The bond market watched the stock market.

Next week, the economic calendar is packed to the rafters. There are a number of potentially market-moving data releases and there’s a good chance of a surprise or two along the way. The focus is expected to be on the January Employment Report. Forecasting January payrolls is an adventure due to the large seasonal adjustment (we lost 2.6 million jobs before seasonal adjustment a year ago).

A reduced rate of seasonal hiring in November and December should lead to a reduced rate of seasonal layoffs in January, putting some upward pressure on the seasonally adjusted number. This release will also include annual benchmark revision to the payroll data.

In September, the Bureau of Labor Statistics indicated that (based on tax receipts) the March 2012 level of payrolls would likely be raised by about 386,000 (and +453,000 for private-sector payrolls). One should take the reported payroll figure with a grain of salt, but the stock market may use it as an excuse. The initial estimate of fourth quarter GDP growth is expected to be between 1.0% and 1.5%, but these data will be revised, and revised again.

Indices

  Last Last Week YTD return %
DJIA 13825.33 13596.02 5.50%
NASDAQ 3130.38 3136.00 3.67%
S&P 500 1494.82 1480.94 4.81%
MSCI EAFE 1664.41 1655.22 3.77%
Russell 2000 900.19 890.36 5.99%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.16 0.08
30-year mortgage 3.42 3.98

Currencies

  Last 1-year ago
Dollars per British Pound 1.578 1.560
Dollars per Euro 1.337 1.302
Japanese Yen per Dollar 90.040 77.720
Canadian Dollars per Dollar 1.003 1.010
Mexican Peso per Dollar 12.652 13.131

Commodities

  Last 1-year ago
Crude Oil 95.15 98.75
Gold 1669.35 1667.43

Bond Rates

  Last 1-month ago
2-year treasury 0.26 0.26
10-year treasury 1.91 1.71
10-year municipal (TEY) 2.89 3.05

Treasury Yield Curve – 01/25/2013

Treasury Yield Curve – 01/25/2013 [1]

S&P Sector Performance (YTD) – 01/25/2013

S&P Sector Performance (YTD) – 01/25/2013 [2]

Economic Calendar

January 28th

 —

Durable Goods Orders (December)
Pending Home Sales Index (December)
January 29th

 —

Consumer Confidence (January)
January 30th

 —

Real GDP (1Q13, advance estimate)
FOMC Policy Decision (no Bernanke press briefing)
January 31st

 —

Jobless Claims (week ending January 25th)
Employment Cost Index (4Q12)
Personal Income, Spending (December)
Chicago PM Index (January)
February 1st

 —

Employment Report (January)
Consumer Sentiment (January)
ISM Manufacturing Index (January)
Motor Vehicle Sales (January)
February 3rd

 —

Super Bowl XLVII
February 18th

 —

Presidents Day Holiday (markets closed)
March 20th

 —

FOMC Policy Decision, Bernanke Press Briefing

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.

[4]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 January 24th, 2013.

©2013 Raymond James Financial Services, Inc. member FINRA [5] / SIPC [6].


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