Clarksville, TN – The week began with a renewed sense of optimism that a Greek debt deal would be worked out. Sentiment then faded after negotiations with Greece’s creditors broke down, but then hopes continued that a deal would be reached over the weekend.
The economic data were mixed. Home sales figures improved in May. Durable goods orders were disappointing. The estimate of 1Q15 GDP was revised to show a -0.2% annual rate (vs. -0.7% in the second estimate), up 3.0% from a year ago. Note that the estimate of Gross Domestic Income rose at a 1.9% annual rate (+3.7% y/y).
The May personal income and spending suggested that inflation-adjusted consumer spending (70% of GDP) was on track for about a 3.0% annual rate in 2Q15. The University of Michigan’s Consumer Sentiment Index rose more than expected in the full-month reading for June, with a sharp rise in expectations (thought to be a driver of big ticket spending).Next week, fresh June data will arrive. With Fed policy decisions being data-dependent, financial market participants are likely to react sharply to any surprises. The ADP figures, the Consumer Confidence Index and the ISM manufacturing data have plenty of market-moving potential, but most of the weight will be on the Employment Report (released a day sooner than usual due to Friday’s holiday).
Payroll figures for June will be subject to seasonal adjustment issues (in June 2014, prior to seasonal adjustment, we lost over 800,000 jobs in education, but gained about 1.4 million non-education jobs). One should really concentrate on the three-month average gain in payrolls, but the markets will likely focus solely on the June figure (which will be subject to revision). Note that neither the stock market nor the bond market will close early on Thursday, although market activity is expected to thin out by the afternoon.
Indices
Last | Last Week | YTD return % | |
DJIA | 17890.36 | 18115.84 | 0.38% |
NASDAQ | 5112.19 | 5132.95 | 7.94% |
S&P 500 | 2102.31 | 2121.24 | 2.11% |
MSCI EAFE | 1910.10 | 1881.39 | 7.62% |
Russell 2000 | 1283.28 | 1284.68 | 6.52% |
Consumer Money Rates
Last | 1 year ago | |
Prime Rate | 3.25 | 3.25 |
Fed Funds | 0.13 | 0.09 |
30-year mortgage | 4.14 | 4.17 |
Currencies
Last | 1 year ago | |
Dollars per British Pound | 1.571 | 1.697 |
Dollars per Euro | 1.120 | 1.360 |
Japanese Yen per Dollar | 123.660 | 101.930 |
Canadian Dollars per Dollar | 1.239 | 1.074 |
Mexican Peso per Dollar | 15.473 | 13.054 |
Commodities
Last | 1 year ago | |
Crude Oil | 59.55 | 107.25 |
Gold | 1173.91 | 1313.27 |
Bond Rates
Last | 1 month ago | |
2-year treasury | 0.71 | 0.61 |
10-year treasury | 2.45 | 2.11 |
10-year municipal (TEY) | 3.66 | 3.57 |
Treasury Yield Curve – 06/26/2015
As of close of business 6/25/2015
S&P Sector Performance (YTD) – 06/26/2015
As of close of business 6/25/2015
Economic Calendar
June 29th | — | Pending Home Sales Index (May) |
June 30th | — | Consumer Confidence Index (June) |
July 1st | — | ADP Payroll Estimate (June) ISM Manufacturing Index (June) Motor Vehicle Sales (June) |
July 2nd | — | Employment Report (June) |
July 3rd | — | Independence Day Holiday (observed, markets closed) |
July 6th | — | ISM Non-Manufacturing Index (June) |
July 8th | — | FOMC Minutes (June 16th-17th) |
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 June 25th, 2015.