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Clarksville, TN – Concerns about the economic recovery at home and abroad helped pushed long-term interest rates lower (with the 10-year Treasury yield below 2.5%). Stocks fell broadly.
The economic data were mixed. April retail sales and industrial production disappointed, but there were upward revisions to previous figures. Building permits and housing starts jumped sharply in April, but strength was concentrated in the volatile multi-family sector.
Single-family construction activity improved only modestly. The Consumer Price Index rose in line with expectations, reflecting higher prices of food and gasoline. A jump in airline fares added to the core CPI.The Producer Price Index rose more than anticipated, but the gauges for the earlier stages of production suggested limited inflation pressure within the pipeline. Import prices fell. Consumer sentiment fell short of expectations in the mid-month reading for May.
Next week, the economic calendar is relatively thin. We’re unlikely to get any new revelations from the FOMC minutes, but there’s always a chance that the financial markets will take something out of context and run with it.
Given Fed Chair Yellen’s concerns about the housing recovery, the home sales figures will likely receive a lot more scrutiny than usual (but bear in mind that the new home sales figures are erratic and unreliable). The bond market will close early on Friday ahead of the three-day weekend.
Consumer Money Rates
Treasury Yield Curve – 5/16/2014
S&P Sector Performance (YTD) – 5/16/2014
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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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