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Weekly Market Snapshot from Frazier Allen for the week of July 7th, 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. The June ISM non-manufacturing survey disappointed, but motor vehicle sales were strong and the employment report was better than anticipated. Nonfarm payrolls rose by 195,000 in June (the median forecast was 165,000), while figures for April and May were revised a net 70,000 higher.

Manufacturing payrolls continued to slide, but there were strong gains in business and professional services, as well as retail and leisure and hospitality. Payroll gains at eating and drinking establishments were strong for a third consecutive month (accounting for a little over a quarter of private-sector job gains in 2Q13).

The unemployment rate held steady at 7.6% (labor force participation edged higher). Long-term unemployment fell, but remained elevated. Unemployment rates for teenagers and young adults remain high.

Policymakers at the Bank of England and the European Bank surprised the markets, as each moved (independently) toward providing forward guidance on short-term interest rates. The dollar rallied. The employment report helped push long-term interest rates higher in the U.S.

Sidestepping a major uncertainty in the hiring outlook for the second half, the White House delayed the requirement that businesses with more than 50 employees provide health insurance to their workers or pay a penalty until 2015. The penalty was set to go in effect in January 2014 based on a six-month lag (meaning that firms had to decide staffing hours now).

Next week, earnings season gets underway. It will be important to hear what firms have to say about the composition of earnings (top line, vs. cost-cutting) and what sort of guidance they offer on the next quarter or two. The mid-month economic figures matter for the markets, but the reports are likely to be overshadowed by Bernanke’s semi-annual monetary policy testimony to Congress (which will give the markets another chance to misinterpret the Fed’s policy message).

Indices

  Last Last Week YTD return %
DJIA 14988.55 15024.49 14.38%
NASDAQ 3443.67 3401.863 14.05%
S&P 500 1615.41 1613.2 13.27%
MSCI EAFE 1645.23 1637.32 2.57%
Russell 2000 991.13 979.92 16.69%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.09 0.18
30-year mortgage 4.46 3.62

Currencies

  Last 1-year ago
Dollars per British Pound 1.508 1.561
Dollars per Euro 1.292 1.254
Japanese Yen per Dollar 100.080 79.840
Canadian Dollars per Dollar 1.051 1.013
Mexican Peso per Dollar 12.879 13.354

Commodities

  Last 1-year ago
Crude Oil 101.24 87.66
Gold 1248.80 1615.40

Bond Rates

  Last 1-month ago
2-year treasury 0.39 0.29
10-year treasury 2.70 2.15
10-year municipal (TEY) 4.48 3.35

Treasury Yield Curve – 07/5/2013

Treasury Yield Curve – 07/5/2013

S&P Sector Performance (YTD) – 07/5/2013

S&P Sector Performance (YTD) – 07/5/2013

Economic Calendar

July 10th

 —

FOMC Minutes (June 18-19)
July 12th

 —

Producer Price Index (June)
July 15th

 —

Retail Sales (June)
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 June 27th, 2013.

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


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