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Clarksville, 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.”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).
Consumer Money Rates
Treasury Yield Curve – 5/9/2014
S&P Sector Performance (YTD) – 5/9/2014
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Tax Equiv Muni yields (TEY) assume a 35% tax rate on triple-A rated, tax-exempt insured revenue bonds.
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.
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