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Clarksville Weekly Market Snapshot from Frazier Allen for the week of May 4th, 2014

 

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – There were a lot of economic data reports this week. Most of them were consistent with weather-related restraint in 1Q14 and a rebound in activity into early 2Q14. Real GDP rose at a 0.1% annual rate in the advance estimate for 1Q14 – while weather was a factor, the GDP growth figure was also trimmed by a wider trade deficit and slower inventory growth.

Personal income and spending figures improved in March, with upward revisions to figures for February. Unit auto sales slowed a little in April, still well above the first quarter average.

Frazier Allen

Frazier Allen

The ISM Manufacturing Index was disappointing. Nonfarm payrolls rose by 288,000 in the initial estimate for April, while figures for February and March were revised a net 36,000 higher.

The unemployment rate dropped to 6.3% (from 6.7%), but that was due to a sharp decrease in labor force participation.

The employment/population ratio was unchanged, up only slightly from a year ago (suggesting that little of the excess slack has been taken up in the job market). Average hourly earnings were unchanged (another sign of slack), up 1.9% from a year ago.

As expected, the Federal Open Market Committee reduced the monthly pace of asset purchases by another $10 billion (to $45 billion). The policy statement was a near photocopy of the March statement. However, the FOMC noted that consumer spending “appears to be rising more quickly,” while “business fixed investment edged down.”

On Wednesday, Fed Chair Janet Yellen will testify before the Joint Economic Committee of Congress on “the economic outlook.” Yellen is expected to provide her assessment of the job market situation, as well as the overall outlook for the economy and monetary policy. We don’t expect any real changes in the policy outlook at this point, but you never know.

Indices

  Last Last Week YTD return %
DJIA 16558.87 16501.65 -0.11%
NASDAQ 4127.45 4148.34 -1.18%
S&P 500 1883.68 1878.61 1.91%
MSCI EAFE 1943.58 1927.38 1.46%
Russell 2000 1125.97 1144.35 -3.24%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.07 0.11
30-year mortgage 4.29 3.35

Currencies

  Last 1-year ago
Dollars per British Pound 1.690 1.557
Dollars per Euro 1.388 1.319
Japanese Yen per Dollar 102.250 97.540
Canadian Dollars per Dollar 1.098 1.006
Mexican Peso per Dollar 13.078 12.138

Commodities

  Last 1-year ago
Crude Oil 99.42 91.03
Gold 1285.25 1468.78

Bond Rates

  Last 1-month ago
2-year treasury 0.43 0.43
10-year treasury 2.61 2.75
10-year municipal (TEY) 3.86 4.42

Treasury Yield Curve – 5/2/2014

Treasury Yield Curve – 5/2/2014

S&P Sector Performance (YTD) – 5/2/2014

S&P Sector Performance (YTD) – 5/2/2014

Economic Calendar

May 5th  — ISM Non-Manufacturing Index (April)
May 6th  — Trade Balance (March)
May 7th  — Yellen JEC Tesimony
May 8th  — Jobless Claims (week ending May 3rd)
May 13th  — Retail Sales (April)
May 16th  — Building Permits, Housing Starts (April)
May 26th  — Memorial Day 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 May 1st, 2014.

©2014 Raymond James Financial Services, Inc. member FINRA / SIPC.


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