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Clarksville Weekly Market Snapshot from Frazier Allen for the week of January 5th, 2014

 

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – The economic data reports of recent weeks contained a few surprises. Consumer spending growth in 3Q13 was stronger than previously estimated, while monthly figures showed acceleration in spending growth in the first two months of 4Q13 (although this is somewhat inconsistent with the pace of income growth).

Right now, inflation-adjusted consumer spending (70% of Gross Domestic Product) appears to be on track for about a 4% annual rate in 4Q13 – impressive, although the current figures may be revised. Durable goods orders rose more than expected in November, with the details suggesting that capital spending plans were delayed due to the government shutdown.

Frazier Allen

Frazier Allen

The stock market finished 2013 on a strong note, but investors may be concerned about the pace of Fed tapering in 2014. The 10-year Treasury note yield has gravitated toward 3%, a level which Federal Reserve policymakers are likely comfortable with.

Long-term interest rates are expected to trend gradually higher over the course of 2014, but we should see some volatility around that trend (and the stock market ought to react accordingly).

Next week, the FOMC minutes may provide some clues regarding the expected pace of Fed tapering. However, the focus will be on Friday’s job market figures. Seasonal adjustment is often tricky in December. We normally shed jobs in construction, education, and leisure, but gain jobs in retail and package deliveries.

Seasonal job losses are likely to be somewhat less than normal, while seasonal job gains may be a bit stronger. Hence, we should see a relatively strong gain (+220,000 to +240,000) in adjusted payrolls. The unemployment rate is expected to hold steady at 7.0%, although the trend is lower.

Indices

  Last Last Week YTD return %
DJIA 16441.35 16479.88 -0.82%
NASDAQ 4143.07 4167.18 -0.80%
S&P 500 1831.98 1842.02 -0.89%
MSCI EAFE 1894.74 1885.14 -1.09%
Russell 2000 1150.72 1162.65 -1.11%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.10 0.17
30-year mortgage 4.63 3.34

Currencies

  Last 1-year ago
Dollars per British Pound 1.644 1.623
Dollars per Euro 1.368 1.317
Japanese Yen per Dollar 104.850 87.100
Canadian Dollars per Dollar 1.064 0.987
Mexican Peso per Dollar 13.104 12.773

Commodities

  Last 1-year ago
Crude Oil 95.44 93.12
Gold 1224.60 1688.20

Bond Rates

  Last 1-month ago
2-year treasury 0.39 0.30
10-year treasury 3.00 2.85
10-year municipal (TEY) 4.55 4.34

Treasury Yield Curve – 01/03/2014

Treasury Yield Curve – 01/03/2014

S&P Sector Performance (YTD) – 01/03/2014

S&P Sector Performance (YTD) – 01/03/2014

Economic Calendar

January 6th

 —

ISM Non-Manufacturing Index (December)
January 7th

 —

Trade Balance (November)
January 8th

 —

ADP Payroll Estimate (December)
FOMC Minutes (December 17-18)
January 9th

 —

Jobless Claims (week ending January 4)
January 10th

 —

Employment Report (December)
January 14th

 —

Retail Sales (December)
January 15th

 —

Fed Beige Book
January 17th

 —

Building Permits, Housing Starts (December)
Industrial Production (December)
January 20th

 —

MLK, Jr. Holiday (markets closed)
January 29th

 —

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 January 2nd, 2013.

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


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