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Clarksville Weekly Market Snapshot from Frazier Allen for the week of May 11th, 2014

 

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – The economic data calendar was thin. The ISM Non-Manufacturing Index was stronger than expected, but the details of the report, including comments from supply managers, suggested that growth was not especially strong.

In her congressional testimony, Fed Chair Janet Yellen said that “although real GDP growth is currently estimated to have paused in the first quarter of this year, I see that pause as mostly reflecting transitory factors, including the effects of the unusually cold and snowy winter weather,” adding “many recent indicators suggest that a rebound in spending and production is already under way, putting the overall economy on track for solid growth in the current quarter.”

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Yellen noted that labor market conditions have “improved appreciably,” but cautioned “they are still far from satisfactory.” She highlighted two key risks to the economic outlook: 1) “adverse developments abroad, such as heightened geopolitical tensions or an intensification of financial stresses in emerging market economies, could undermine confidence in the global economic recovery” and 2) “the recent flattening out in housing activity could prove more protracted than currently expected rather than resuming its earlier pace of recovery.”

She downplayed concerns that monetary policy is fueling bubbles in the financial sector.

Next week, the economic calendar is full. The focus will likely be on the retail sales report. Results should reflect a rebound from the effects of adverse weather in the first quarter. Note that the retail sales figures are adjusted for the late Easter holiday, but it’s hard to get it exactly right – which means that there’s a good chance for a surprise.

Given Yellen’s stated concerns about the housing,Friday’s residential construction figures will receive more scrutiny than usual (supply constraints and affordability issues are likely to remain important factors in the near term).

Indices

  Last Last Week YTD return %
DJIA 16550.97 16558.87 -0.15%
NASDAQ 4051.50 4127.45 -3.00%
S&P 500 1875.63 1883.68 1.48%
MSCI EAFE 1944.74 1943.58 1.52%
Russell 2000 1097.43 1125.97 -5.69%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.07 0.13
30-year mortgage 4.21 3.42

Currencies

  Last 1-year ago
Dollars per British Pound 1.693 1.556
Dollars per Euro 1.386 1.317
Japanese Yen per Dollar 101.630 98.880
Canadian Dollars per Dollar 1.084 1.002
Mexican Peso per Dollar 12.928 12.057

Commodities

  Last 1-year ago
Crude Oil 100.26 96.62
Gold 1289.17 1467.81

Bond Rates

  Last 1-month ago
2-year treasury 0.39 0.35
10-year treasury 2.60 2.63
10-year municipal (TEY) 3.80 4.38

Treasury Yield Curve – 5/9/2014

Treasury Yield Curve – 5/9/2014

S&P Sector Performance (YTD) – 5/9/2014

S&P Sector Performance (YTD) – 5/9/2014

Economic Calendar

May 12  — Treasury Budget (April)
May 13  — Small Business Optimism (April)
Import Prices (April)
Retail Sales (April)
Business Inventories (March)
May 14  — Producer Price Index (April)
May 15  — Initial Claims (week ending May 10)
Consumer Price Index (April)
Real Weekly Earnings (April)
Empire State Manufacturing Index (May)
Industrial Production (April)
Philadelphia Fed Index (May)
Homebuilder Sentiment (May)
Yellen Speaks (“small businesses and the economy”)
May 16  — Building Permits, Housing Starts (April)
Consumer Sentiment (mid-May)
May 21  — FOMC Minutes (April 29-30)

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 8th, 2014.

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


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