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Clarksville Weekly Market Snapshot from Frazier Allen for the week of February 16th, 2014

 

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – In her first monetary policy testimony to Congress, Fed Chair Janet Yellen appeared calm, confident, and in charge.

She pledged continuity in monetary policy and regulatory reform. While “not on a preset path,” the monthly pace of asset purchases will likely be reduced “in further measured steps at future meetings” (which is widely interpreted as -$10 billion per Fed policy meeting).

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She repeated the notion that the overnight lending rate is likely to remain low “well past the time that the unemployment rate declines below 6.5%.”

She indicated that, while the Fed is watching developments in emerging economies closely, “our sense is that at this stage these developments do not pose a substantial risk to the U.S. economic outlook.” She also reserved judgment on the recent soft gains in nonfarm payrolls, noting the impact of poor weather.

With little fanfare, the Senate and House each passed clean extensions of the federal debt ceiling (to March 16th, 2015). These will be reconciled and the final bill will then be signed by the president. That’s one less worry for the financial markets.

Retail sales and industrial production figures for January disappointed. Investors were willing to dismiss that as being due to bad weather compounded by seasonal adjustment. However, largely unnoticed by the markets, figures for the last few months were revised down, suggesting less momentum at the end of the year and slower growth in the first quarter of 2014.

Next week, the Bureau of Labor Statistics will significantly expand the scope of the Producer Price Index. The new headline index will include services (in fact, about two-thirds of the headline figure will be services). This should provide more detail about the transmission of inflation pressures. However, these pressures are expected to be relatively benign in 2014.

Indices

  Last Last Week YTD return %
DJIA 16027.59 15628.53 -3.31%
NASDAQ 4240.67 4057.12 1.53%
S&P 500 1829.83 1773.43 -1.00%
MSCI EAFE 1889.48 1832.15 -1.36%
Russell 2000 1147.79 1103.93 -1.36%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.06 0.16
30-year mortgage 4.28 3.53

Currencies

  Last 1-year ago
Dollars per British Pound 1.665 1.556
Dollars per Euro 1.367 1.345
Japanese Yen per Dollar 102.200 93.480
Canadian Dollars per Dollar 1.097 1.002
Mexican Peso per Dollar 13.296 12.698

Commodities

  Last 1-year ago
Crude Oil 100.35 97.01
Gold 1298.69 1646.25

Bond Rates

  Last 1-month ago
2-year treasury 0.31 0.38
10-year treasury 2.74 2.84
10-year municipal (TEY) 4.48 4.49

Treasury Yield Curve – 02/14/2014

Treasury Yield Curve – 02/14/2014

S&P Sector Performance (YTD) – 02/14/2014

S&P Sector Performance (YTD) – 02/14/2014

Economic Calendar

February 17th

 —

Presidents Day Holiday (markets closed)
February 18th

 —

Empire State Manufacturing Index (February)
Homebuilder Sentiment (February)
February 19th

 —

New Producer Price Index (January)
Building Permits, Housing Starts (January)
FOMC Minutes (January 28th-29th)
February 20th

 —

Jobless Claims (week ending February 15th)
Consumer Price Index (January)
Philadelphia Fed Index (February)
Leading Economic Indicators (January)
February 28th

 —

Real GDP (4Q13, 2nd estimate)
March 7th

 —

Employment Report (February)
March 19th

 —

FOMC Policy Decision, Yellen 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 February 13th, 2013.

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


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