Clarksville Weekly Market Snapshot from Frazier Allen for the week of March 13th, 2016

Clarksville, TN – The economic calendar was thin. Jobless claims fell more than expected (not too unusual), while the four-week average remained very low (about as low as it can go given the normal labor market frictions). Small business optimism fell in February. The Quarterly Services Survey pointed to an upward revision to the estimate of consumer spending growth for 4Q15.

The European Central Bank surprised the markets by doing much more than expected (lowering interest rates, expanding QE, and making other efforts to boost growth).

Enthusiasm was quickly tempered, however, when ECB President Draghi, in his post-meeting press conference, indicated that further stimulus was unlikely. The euro, down 1.6% against the dollar on the ECB’s action, reversed to up 1.8% – an exceptionally large intraday swing.

Next week, the economic calendar is unusually busy on Tuesday and Wednesday, but the focus will be on the Fed.

The Federal Open Market Committee is widely expected to leave short-term interest rates unchanged. The wording of the policy statement is likely to change slightly. Fed officials will revise their economic projections.

However, the growth outlook is expected to be only modestly softer than what was expected in December. The dots in the dot plot (officials’ expectations of the appropriate year-end target rates for federal funds) ought to drift a little lower, but remain well above market expectations.

Fed Chair Yellen is expected to present more detail than she did in her congressional testimony last month. The Fed is expected to remain in tightening mode, eyeing job market improvement and an expected upturn in inflation. However, concerns about financial stability should keep policy on hold in the near term.

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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 March 10th, 2016.

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