38 F
Clarksville
Thursday, March 28, 2024
HomeBusinessWeekly Market Snapshot from Frazier Allen for the week of June 4th,...

Weekly Market Snapshot from Frazier Allen for the week of June 4th, 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 economic data were mixed, but generally better than expected.  Home prices continued to advance.  Consumer confidence improved. The estimate of first quarter GDP growth was revised lower (a 2.4% annual rate, vs. +2.5% in the advance estimate), but consumer spending and business fixed investment were both revised a bit higher. Personal income was flat in April (the Employment Report had shown a decrease in hours offsetting the impact of more jobs).

Personal spending fell 0.2%, partly reflecting lower gasoline prices and more normal temperatures (lower household energy consumption). Ex-energy, spending would have risen about 0.3%. Inflation-adjusted consumer spending (70% of GDP) edged up 0.1% – it’s only one month (and subject to revision), but spending appears to be on track for about a 2% annual rate in 2Q13 (vs. +3.4% in 1Q13).

Fed policymakers are widely expected to begin tapering the rate of asset purchases at the September policy meeting (although that will depend on the economic data). Recall that it is total amount of securities purchased that matters, not the pace. There was no significant increase in long-term interest rates after QE1 and QE2 ended. The recent increase in long-term interest rates appears to be due more to growing expectations of a second half pickup in economic activity. However, long-term interest rates should not rise so fast that they jeopardize the recovery (so expect a little back-and-forth).

Next week, the ISM Manufacturing Index may set the tone for the early part of the week, but Friday’s job market figures will carry the most weight. Payrolls are likely to post a moderately strong gain, while the unemployment rate is likely to hold steady (at 7.5%). The Fed wants to see “substantial improvement” in the job market before tapering its asset purchases – and we’re not there yet. Note that Fed officials are looking at a variety of labor market data, not just payrolls and the unemployment rate.

Indices

  Last Last Week YTD return %
DJIA 15324.53 15294.5 16.94%
NASDAQ 3491.30 3459.417 15.62%
S&P 500 1654.41 1650.51 16.00%
MSCI EAFE 1723.19 1734.35 7.43%
Russell 2000 994.43 984.28 17.08%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.08 0.17
30-year mortgage 3.81 3.75

Currencies

  Last 1-year ago
Dollars per British Pound 1.521 1.552
Dollars per Euro 1.305 1.241
Japanese Yen per Dollar 100.900 78.980
Canadian Dollars per Dollar 1.031 1.028
Mexican Peso per Dollar 12.823 14.075

Commodities

  Last 1-year ago
Crude Oil 93.61 87.82
Gold 1413.37 1564.75

Bond Rates

  Last 1-month ago
2-year treasury 0.30 0.21
10-year treasury 2.16 1.72
10-year municipal (TEY) 3.29 2.95

Treasury Yield Curve – 05/31/2013

Treasury Yield Curve – 05/31/2013

S&P Sector Performance (YTD) – 05/31/2013

S&P Sector Performance (YTD) – 05/31/2013

Economic Calendar

June 3rd

 —

ISM Manufacturing Index (May)
Motor Vehicle Sales (May)
June 4th

 —

Trade Balance (April)
June 5th

 —

ADP Payroll Estimate (May)
ISM Non-Manufacturing Index (May)
Fed Beige Book
June 6th

 —

Jobless Claims (week ending June 1st)
June 7th

 —

Employment Report (May)
June 13th

 —

Retail Sales (May)
June 14th

 —

Industrial Production (May)
June 19th

 —

FOMC Policy Decision, Bernanke Press Briefing
July 4th

 —

Independence Day Holiday (markets closed)
July 31st

 —

Real GDP (advance 2Q13 + comprehensive revisions)
FOMC Policy Decision (no 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.

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 31st, 2013.

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

Frazier Allen
Frazier Allenhttp://www.raymondjames.com/frazierallen
Frazier Allen, WMS, CRPS, Financial Advisor with F&M Bank 50 Franklin Street | Clarksville, TN 37040 | 931-553-2048
RELATED ARTICLES

Latest Articles