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Clarksville Weekly Market Snapshot from Frazier Allen for the week of July 27th, 2014

 

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – The economic data were mixed. New home sales were much weaker than expected in June, with a sharp downward revision to May (March and April figures were also revised lower) – however, these figures are reported with an enormous level of uncertainty.

Existing home sales improved, with a further increase in the number of homes for sale. Durable goods orders rose moderately, but details showed a lackluster trend in shipments of nondefense capital goods. The Consumer Price Index rose 0.3% (+2.1% y/y), inflated partly by the seasonal adjustment for gasoline (which rose 0.3% before adjustment and +3.3% after adjustment). Ex-food & energy, the CPI edged up 0.1% (+2.0% y/y).

Frazier Allen

Frazier Allen

Financial markets did not react much to the economic figures or to geopolitical developments. Instead, the markets appeared to be skittish, looking for direction.

Next week, the economic calendar is extremely busy. Oddly, Wednesday’s Fed policy decision is likely to be the least interesting. It’s widely expected that the Federal Open Market Committee will taper the monthly pace of asset purchases by another $10 billion (to $25 billion), on track to end the program after the policy meeting in late October.

Fed officials are unlikely to provide any new clues as to when short-term interest rates will begin to rise. There’s always a lot of uncertainty in the advance GDP estimate. The government doesn’t have a complete picture and will have to make assumptions about foreign trade, inventories, and a number of other components. Consumer spending and business fixed investment should be moderate.

A faster pace of inventories should add to GDP growth, while a wider trade deficit will subtract. Adding to the uncertainty, the government will also release annual benchmark revisions to the GDP figures for the last few years. The Employment Report is likely to be moderately strong. Note that seasonal adjustment can be tricky in July (hence, a good chance for a surprise).

Indices

Last Last Week YTD return %
DJIA 17083.80 16976.81 3.06%
NASDAQ 4472.11 4363.45 7.08%
S&P 500 1987.98 1958.12 7.55%
MSCI EAFE 1969.21 1954.79 2.80%
Russell 2000 1156.26 1133.60 -0.63%

Consumer Money Rates

Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.09 0.10
30-year mortgage 4.13 4.31

Currencies

Last 1-year ago
Dollars per British Pound 1.701 1.535
Dollars per Euro 1.348 1.324
Japanese Yen per Dollar 101.630 100.050
Canadian Dollars per Dollar 1.072 1.028
Mexican Peso per Dollar 12.936 12.487

Commodities

Last 1-year ago
Crude Oil 105.32 105.32
Gold 1298.98 1344.14

Bond Rates

Last 1-month ago
2-year treasury 0.49 0.45
10-year treasury 2.48 2.52
10-year municipal (TEY) 3.48 3.62

 

Treasury Yield Curve – 7/25/2014

Treasury Yield Curve – 7/25/2014

 

S&P Sector Performance (YTD) – 7/25/2014

S&P Sector Performance (YTD) – 7/25/2014

Economic Calendar

July 28th Pending Home Sales Index (June)
July 29th Case-Shiller Home Prices (May)
Consumer Confidence (July)
July 30th ADP Payroll Estimate (July)
Real GDP (2Q14 advance and benchmark revisions)
FOMC Policy Decision, (no press conference)
July 31st Jobless Claims (week ending July 19th)
Employment Cost Index (July)
Chicago Purchasing Managers Index (July)
August 1st Employment Report (July)
Personal Income and Spending (June + benchmark revisions)
ISM Manufacturing Index (July)
Motor Vehicle Sales
August 5th ISM Non-Manufacturing Index (July)

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 24th, 2014.

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


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