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Clarksville, TN – The June Employment Report was stronger than expected. Nonfarm payrolls rose by 288,000 (median forecast: +215,000), with widespread gains across sectors (April and May were revised a net 29,000 higher).
The unemployment fell to 6.1% (from 6.3%), although the employment/population ratio edged up only slightly (to 59.0%, vs. 58.9% in May and 58.7% a year ago – still suggesting plenty of slack in the labor market). Average hourly earnings rose 0.2% in June, up 2.0% y/y (the CPI rose 2.1% over the 12 months ending in May).Motor vehicle sales strengthened further in June. The ISM Manufacturing Index was little changed in June, consistent with a moderate pace of improvement.
Fed Chair Janet Yellen said that the central bank would not use monetary policy as the primary tool to address financial excesses (such as bubbles, tight credit spreads, and leveraged borrowing), but would instead rely on macroprudential policies (that is, supervision and regulation aimed at broader financial risks).
Yellen said that there are signs of “pockets” of increased risk-taking across the financial system, but Fed officials not currently see a systemic threat.
Next week, the economic calendar thins out considerably. The minutes of the June 17th-18th Federal Open Market Committee meeting are unlikely to contain new information, but there’s always a chance that the markets will take something out of context (we know that officials discussed exit strategies, as prudent policy planning, not a signal of an imminent tightening).
Weekly claims for unemployment insurance will be subject to seasonal noise, due to summer auto plant shutdowns for retooling – take any large swings with a grain of salt (figures should settle down in a few weeks).
Consumer Money Rates
Treasury Yield Curve – 7/3/2014
S&P Sector Performance (YTD) – 7/3/2014
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.
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 July 2nd, 2014.
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