Clarksville Weekly Market Snapshot from Frazier Allen for the week of September 20th, 2015

Clarksville, TN – The Federal Open Market Committee delayed the start of policy normalization, citing concerns about global economic and financial developments.

The FOMC is not reacting to overseas developments per se, but rather to the implications for the U.S. economy (some restraint on growth, further downward pressure on inflation). In the revised dot plot, there was little agreement about where the federal funds rate would be at the end of 2016 and 2017.

The Fed did discuss raising rates. However, in her post-FOMC press briefing, Fed Chair Janet Yellen said that heightened uncertainties abroad and a lower expected path for inflation left officials wanting to see more evidence.

The economic data were mixed. Retail sales were restrained by lower gasoline prices and a pullback in building materials, but core sales continued to improve at a moderately strong pace. Industrial production fell last month, partly reflecting the unwinding of a seasonal quirk in autos. Lower energy prices pushed the Consumer Price Index down 0.1% (+0.2% y/y). Residential construction figures were mixed (housing starts fell, but the more accurate building permit figures improved).

Next week, the economic data are second-tier. While there could be market reactions to any surprises, none of the reports is going to alter the bigger economic picture. Fed Chair Yellen will speak on Thursday after the market’s close. Investors should pay attention to what’s going on in Washington, as a possible government shutdown looms.

Congress must come up with funding beyond September 30th (the end of the fiscal year). Tea Party Republicans are threatening to withhold funding for Planned Parenthood. In addition, Congress needs to raise the federal debt ceiling by early December.

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 September 17th, 2015.

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