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The Weekly Market Snapshot from Frazier Allen


Weekly Market Snapshot

Market Commentary by Scott J. Brown, Ph.D., Chief Economist

Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services

Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services

The March Employment Report was good, but not great. Nonfarm payrolls rose by 216,000 – a 159,000 monthly pace in 1Q11 (about 130,000 would correspond to trend growth in the working-age population, and we’d rather see +300,000 per month for a couple of years to make up for the jobs lost during the recession). Private-sector payrolls rose by 230,000, up 1.5% from a year ago. State and local government shed 15,000, following a 46,000 decline in February (-282,000, or -1.4%, from a year ago). The unemployment rate edged down to 8.8%, vs. 8.9% in February and 9.8% in November. The employment-population ratio, a better measure of capacity utilization in the labor market, edged up to 58.5%, trending gradually higher in recent months, but little changed from a year ago. Average hourly earnings and average weekly earnings were flat (up 1.7% year-over-year and 2.3% year-over-year respectively – note that the Consumer Price Index rose 2.1% in the 12 months ending in February).

The other economic data were mixed. However, inflation-adjusted consumer spending (70% of Gross Domestic Product) appears to be tracking at about a 1.5% annual rate in Q1 2011 (vs. +4.0% in Q4 2010). Shipments of nondefense capital goods ex-aircraft, a rough proxy for business fixed investment, are trending down in Q1 2011. Home prices fell further in January, and construction spending declined in the first two months of the quarter. In short, a lot of the key economic data indicate a much slower rate of GDP growth in Q1 2011. So naturally, the stock market is up.

Next week, the economic calendar thins out considerably. Fed Chairman Bernanke speaks on Monday, but his comments are not expected to be market-moving. The European Central Bank is set to hike on Thursday, which could be a mistake given the region’s debt crisis. The current continuing resolution to fund the U.S. federal government expires on Friday. We could see a government shutdown if an agreement isn’t reached.


  Last Last Week YTD return %
DJIA 12319.73 12170.56 6.41%
NASDAQ 2781.07 2736.42 4.83%
S&P 500 1325.83 1309.66 5.42%
MSCI EAFE 1702.55 1697.54 2.67%
Russell 2000 843.55 817.10 7.64%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.13 0.18
30-year mortgage 4.84 5.12


  Last 1-year ago
Dollars per British Pound 1.606 1.519
Dollars per Euro 1.419 1.353
Japanese Yen per Dollar 82.830 93.440
Canadian Dollars per Dollar 0.970 1.016
Mexican Peso per Dollar 11.899 12.331


  Last 1-year ago
Crude Oil 106.72 83.76
Gold 1437.80 1114.50

Bond Rates

  Last 1-month ago
2-year treasury 0.89 0.74
10-year treasury 3.50 3.56
10-year municipal (TEY) 5.11 4.88

Treasury Yield Curve – 4/1/2011 

Treasury Yield Curve – 4/1/2011

S&P Sector Performance (YTD) – 4/1/2011 

S&P Sector Performance (YTD) – 4/1/2011

Economic Calendar

April 4th  —  Bernanke Speaks (“Clearinghouses and Financial Stability”)
April 5th  —  ISM Non-Manufacturing Index (March)
FOMC Minutes (March 15th)
April 7th  —  ECB Policy Meeting
Jobless Claims (week ending April 2nd)
April 12th  —  Trade Balance (February)
April 13th  —  Retail Sales (March)
Fed Beige Book
April 14th  —  Producer Price Index (March)
April 15th  —  Consumer Price Index (March)
Industrial Production (March)
Consumer Sentiment (mid-April)
April 22nd  —  Good Friday Holiday (markets closed)
April 26th-27th  —  FOMC Meeting
Bernanke Press Conference
April 28th  —  Real GDP (Q1 2011, advance estimate)

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 March 31st, 2011.

©2011 Raymond James Financial Services, Inc. member FINRA / SIPC.

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