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Clarksville Weekly Market Snapshot from Frazier Allen for the week of July 8th, 2014

 

F&M Investment Services - Raymond James - Clarksville, TNClarksville, 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).

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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).

Indices

Last Last Week YTD return %
DJIA 16976.24 16846.13 2.41%
NASDAQ 4457.73 4379.05 6.73%
S&P 500 1974.62 1957.22 6.83%
MSCI EAFE 1990.23 1963.27 3.90%
Russell 2000 1199.50 1180.71 3.08%

Consumer Money Rates

Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.09 0.09
30-year mortgage 4.17 4.29

Currencies

Last 1-year ago
Dollars per British Pound 1.716 1.519
Dollars per Euro 1.366 1.303
Japanese Yen per Dollar 101.460 99.750
Canadian Dollars per Dollar 1.063 1.052
Mexican Peso per Dollar 12.941 12.955

Commodities

Last 1-year ago
Crude Oil 104.48 99.60
Gold 1326.69 1259.20

Bond Rates

Last 1-month ago
2-year treasury 0.48 0.39
10-year treasury 2.63 2.57
10-year municipal (TEY) 3.55 3.69

Treasury Yield Curve – 7/3/2014

Treasury Yield Curve – 7/3/2014

S&P Sector Performance (YTD) – 7/3/2014

S&P Sector Performance (YTD) – 7/3/2014

Economic Calendar

July 8th Small Business Optimism (June)
July 9th FOMC Minutes (June 17th-18th)
July 10th Jobless Claims (week ending July 5th)
July 15th Retail Sales (June)
July 16th Producer Price Index (June)
Industrial Production (June)
Fed Beige Book
July 17th Building Permits, Housing Starts (June)
July 22nd Consumer Price Index (July)
Mid-July (tbd) Yellen Monetary Policy Testimony
July 30th Real GDP (2Q14 advance and benchmark revisions)
FOMC Policy Decision, (no press conference)
August 1st Employment Report (July)
September 17th FOMC Policy Decision, Yellen Press Conference

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 July 2nd, 2014.

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


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