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Weekly Market Snapshot from Frazier Allen for the week of March 24th, 2013

 

Weekly Market Snapshot

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

Scott J. Brown Ph.D., Chief Economist Raymond James Investment ServicesThe “Crisis in Cyprus” dampened the U.S. stock market mood early in the week. Why is Cyprus important? Its economy is a little bigger than Scranton. However, like Iceland and Ireland, it has an outsized banking system, several times larger than the overall economy. Even a moderate contraction in the banking system can have a huge impact.

The biggest fear is contagion. The decision to tie aid to a haircut on deposits led to fears of runs on the banks in other countries, but there’s been little evidence of that so far.

There were no surprises from Fed policymakers. The Federal Open Market Committee did not change its forward guidance (on the federal fund rate target, still not expected to start rising until 2015), nor did it alter its asset purchase plans (still $85 billion per month).

However, Chairman Bernanke said that the FOMC could vary the pace of asset purchases amid progress towards its objectives or if the assessment of the efficacy and costs of the program were to change. He added that changes to the pace of asset purchases would not be made frequently.

The economic data showed strength in residential construction, although homebuilder sentiment declined. Housing is improving, but sales have been restrained by supply constraints and problems with appraisals and mortgage credit.

Next week, reports on durable goods orders and new home sales will help fill in the 1Q13 economic picture. The markets will be closed on Friday, but the government will release personal income and spending numbers for February (which should help in gauging the current strength on the household sector).

Indices

  Last Last Week YTD return %
DJIA 14421.49 14539.14 10.05%
NASDAQ 3222.60 3258.93 6.73%
S&P 500 1545.80 1563.23 8.39%
MSCI EAFE 1686.39 1699.43 5.14%
Russell 2000 943.92 953.07 11.13%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.16 0.15
30-year mortgage 3.51 4.08

Currencies

  Last 1-year ago
Dollars per British Pound 1.517 1.585
Dollars per Euro 1.291 1.320
Japanese Yen per Dollar 94.930 83.460
Canadian Dollars per Dollar 1.025 0.993
Mexican Peso per Dollar 12.410 12.707

Commodities

  Last 1-year ago
Crude Oil 92.13 106.86
Gold 1615.35 1651.43

Bond Rates

  Last 1-month ago
2-year treasury 0.25 0.25
10-year treasury 1.91 1.98
10-year municipal (TEY) 3.31 3.14

Treasury Yield Curve – 03/22/2013

Treasury Yield Curve – 03/22/2013

S&P Sector Performance (YTD) – 03/22/2013

S&P Sector Performance (YTD) – 03/22/2013

Economic Calendar

March 26th

 —

Durable Goods Orders (February)
S&P/Case-Shiller Home Prices (January)
New Home Sales (February)
Consumer Confidence (March)
March 27th

 —

Pending Home Sales Index (February)
March 28th

 —

Jobless Claims (week ending March 23rd)
Real GDP (4Q12, 3rd estimate)
Chicago Purchasing Managers Index (March)
March 29th

 —

Good Friday Holiday (markets closed)
Personal Income and Spending (February)
Consumer Sentiment (March)
April 1st

 —

ISM Manufacturing Index (March)
April 3rd

 —

ISM Non-Manufacturing Index (March)
April 5th

 —

Employment Report (March)
April 10th

 —

FOMC Minutes (March 20th)

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 March 21st, 2013.

©2013 Raymond James Financial Services, Inc. member FINRA / SIPC.


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