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Clarksville Weekly Market Snapshot from Frazier Allen for the week of December 15th, 2013

 

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – House and Senate leaders reached an agreement on a mini budget deal. This isn’t the “grand bargain” that lawmakers were tasked with, but it will prevent a government shutdown in January. That removes a major uncertainty for the markets, but also for Federal Reserve policymakers.

The deal reduces (but does not eliminate) the impact of the sequester cuts to spending that were slated for mid-January. The deal does not address the debt ceiling, which will go back into effect on February 7th, nor does it prevent over 1.2 million from losing extended unemployment benefits at the end of this month.

Frazier Allen

Frazier Allen

The economic calendar was relatively light. Retail sales rose more than expected in November, with upward revisions to the figures for September and October. Producer price and import price data showed an absence of pipeline inflationary pressures.

Next week, the focus will be on the Fed policy decision. There are a number of arguments for and against an initial reduction in the Fed’s monthly pace of asset purchases, but the balance has shifted a bit more toward a December taper. We may get a baby taper (a small reduction in the pace of Treasuries).

However, even if the Fed decides to delay again, tapering is coming. Fed officials will revise their projections of growth, unemployment, and inflation. Unless the FOMC decides to have a press briefing after every policy meeting, (as has been suggested), this will be Bernanke’s final appearance.

Indices

  Last Last Week YTD return %
DJIA 15739.43 15821.51 20.11%
NASDAQ 3998.40 4033.17 32.42%
S&P 500 1775.50 1785.03 24.49%
MSCI EAFE 1822.54 1836.93 13.62%
Russell 2000 1103.27 1122.47 29.90%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.08 0.18
30-year mortgage 4.42 3.32

Currencies

  Last 1-year ago
Dollars per British Pound 1.634 1.617
Dollars per Euro 1.375 1.309
Japanese Yen per Dollar 103.110 83.130
Canadian Dollars per Dollar 1.063 0.983
Mexican Peso per Dollar 13.051 12.691

Commodities

  Last 1-year ago
Crude Oil 97.50 86.77
Gold 1230.35 1721.60

Bond Rates

  Last 1-month ago
2-year treasury 0.33 0.29
10-year treasury 2.87 2.71
10-year municipal (TEY) 4.52 4.38

Treasury Yield Curve – 12/13/2013

Treasury Yield Curve – 12/13/2013

S&P Sector Performance (YTD) – 12/13/2013

S&P Sector Performance (YTD) – 12/13/2013

Economic Calendar

December 16th

 —

Industrial Production (November)
December 17th

 —

Consumer Price Index (November)
December 18th

 —

Building Permits, Housing Starts (November)
FOMC Policy Decision, Bernanke Press Briefing
December 19th

 —

Jobless claims (week ending December 14th)
Existing Home Sales (November)
Leading Economic Indicators (November)
December 20th

 —

Real GDP (3Q13, 3rd estimate)
December 23rd

 —

Personal Income and Spending (November)
Consumer Sentiment (December)
December 24th

 —

Durable Goods Orders (November)
New Home Sales (November)
December 25th

 —

Christmas Holiday (markets closed)

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 December 12th, 2013.

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


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