Clarksville, TN – As expected, U.S. financial market participants kept a close eye on developments in Europe. A fragile ceasefire agreement was reached in Ukraine (but we’ve seen that before). Negotiations to reduce austerity in Greece and restructure the country’s debt broke down without making much progress, but the two sides agreed to try again next week.
Retails sales were softer than expected in January and consumer sentiment fell unexpectedly in the mid-February assessment, leading to some concerns about the strength of consumer spending, but also fueling expectations that the Fed will delay its initial increase in short-term interest rates. Unadjusted core retail sales fell 24.9%, the same decline as in January 2014.
Next week, the important economic data reports bunch up on Wednesday. January residential construction data should not be important (the bigger test will come in the spring), but seasonal adjustment could exaggerate.The Fed has signaled that it can be patient in deciding when to begin raising short-term interest rates. However, some officials are more patient than others. That division should be apparent in the minutes of the January policy meeting, and there’s some chance that the wire services (and the financial markets) will take some quote out of context and overreact.
Yet, market participants ought to reserve judgment. Fed Chair Janet Yellen will likely provide more clarity when she testifies to the Senate Banking Committee on February 24th.
Indices
Last | Last Week | YTD return % | |
DJIA | 17972.38 | 17884.88 | 0.84% |
NASDAQ | 4857.61 | 4765.10 | 2.57% |
S&P 500 | 2088.48 | 2062.52 | 1.44% |
MSCI EAFE | 1822.82 | 1820.75 | 2.70% |
Russell 2000 | 1216.27 | 1208.71 | 0.96% |
Consumer Money Rates
Last | 1 year ago | |
Prime Rate | 3.25 | 3.25 |
Fed Funds | 0.13 | 0.06 |
30-year mortgage | 3.69 | 4.28 |
Currencies
Last | 1 year ago | |
Dollars per British Pound | 1.532 | 1.654 |
Dollars per Euro | 1.134 | 1.364 |
Japanese Yen per Dollar | 119.790 | 102.430 |
Canadian Dollars per Dollar | 1.256 | 1.099 |
Mexican Peso per Dollar | 15.030 | 13.275 |
Commodities
Last | 1 year ago | |
Crude Oil | 51.21 | 100.37 |
Gold | 1223.33 | 1287.08 |
Bond Rates
Last | 1 month ago | |
2-year treasury | 0.62 | 0.44 |
10-year treasury | 2.02 | 1.75 |
10-year municipal (TEY) | 3.14 | 3.01 |
Treasury Yield Curve – 02/13/2015
S&P Sector Performance (YTD) – 02/13/2015
Economic Calendar
February 16th | — | Presidents Day holiday (markets closed) |
February 17th | — | Empire State Manufacturing Index (February) |
February 18th | — | Producer Price Index (January) Building Permits, Housing Starts (January) Industrial Production (January) FOMC Minutes (January 27th-28th) |
February 19th | — | Jobless Claims (week ending February 14th) Philadelphia Fed Index (February) Leading Economic Indicators (January) |
February 23rd | — | Existing Home Sales (January) |
February 24th | — | Consumer Confidence (February) Yellen Monetary Policy Testimony (tentative) |
Important Disclosures
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 February 12th, 2015.