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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 economic data calendar was thin, but stock market participants continued to express concerns about the outlook. Bonds rallied, with the 10-year Treasury yield pushing below 3%. The European Central Bank left short-term interest rates unchanged, but ECB President Trichet said that “strong vigilance is warranted,” a signal that rates will almost certainly be raised in July.

The trade deficit narrowed in April, suggesting that net exports may add to GDP growth in 2Q11. The Fed’s Beige Book indicated that “economic activity generally continued to expand, though a few districts indicated some deceleration.” Loan demand was “steady to stronger,” especially in the commercial and industrial sector, while “widespread improvement” was reported in credit quality – a good sign.

Fed Chairman Bernanke said that growth this year “looks to have been somewhat slower than expected,” citing supply-chain disruptions following Japan’s earthquake and tsunami. However he noted that “growth seems likely to pick up in the second half of the year,” as effects of Japan’s disaster dissipate and gasoline prices moderate. He said that “the economy is moving in the right direction,” but cautioned that “it is still producing at levels well below its potential; consequently, accommodative monetary policies are still needed.” The Fed appears unlikely to put in place another round of asset purchases (what many would call “QE3”), but it is also unlikely to tighten policy anytime soon.

Next week, there are a lot of important data releases, but none are likely to alter the underlying picture. The focus will likely be on the retail sales and CPI reports. Note that seasonal adjustment will result in lower gasoline prices in May, depressing the headline PPI and CPI. The core CPI is likely to rise modestly, but could reflect increases in autos and rents.

Indices

  Last Last Week YTD return %
DJIA 12124.36 12248.55 4.72%
NASDAQ 2684.87 2773.31 1.21%
S&P 500 1289.00 1312.94 2.49%
MSCI EAFE 1689.50 1701.51 1.88%
Russell 2000 792.64 820.69 1.15%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.10 0.10
30-year mortgage 4.46 4.82

Currencies

  Last 1-year ago
Dollars per British Pound 1.638 1.457
Dollars per Euro 1.453 1.203
Japanese Yen per Dollar 80.100 91.440
Canadian Dollars per Dollar 0.975 1.040
Mexican Peso per Dollar 11.793 12.811

Commodities

  Last 1-year ago
Crude Oil 101.93 74.36
Gold 1544.70 1229.35

Bond Rates

  Last 1-month ago
2-year treasury 0.41 0.54
10-year treasury 2.97 3.19
10-year municipal (TEY) 3.95 4.14

Treasury Yield Curve – 6/10/2011 

Treasury Yield Curve – 6/10/2011

S&P Sector Performance (YTD) – 6/10/2011 

S&P Sector Performance (YTD) – 6/10/2011

Economic Calendar

June 14th  —  Producer Price Index (May)
Retail Sales (May)
June 15th  —  Consumer Price Index (May)
Empire State Manufacturing Index (June)
Industrial Production (May)
Homebuilder Sentiment (June)
June 16th  —  Jobless Claims (week ending June 11th)
Current Account (1Q11)
Building Permits, Housing Starts (May)
Philadelphia Fed Survey (June)
June 17th  —  FConsumer Sentiment (mid-June)
Leading Economic Indicators (May)
June 21st  —  Existing Home Sales (May)
FOMC Meeting Begins
June 22nd  —  FOMC Policy Decision
Bernanke Press Conference
June 23rd  —  New Home Sales (May)
June 24th  —  Real GDP (1Q11, 3rd estimate)
Durable Goods Orders (May)
July 4th  —  Independence Day (markets closed)
July 8th  —  Employment Report (June)

Treasury Yield Curve – 5/27/2011

Treasury Yield Curve – 5/27/2011

S&P Sector Performance (YTD) – 5/27/2011

S&P Sector Performance (YTD) – 5/27/2011

Economic Calendar

May 30th Memorial Day Holiday (markets closed)
May 31st S&P/Case-Shiller Home Price Index (April)
Chicago PM Index (May)
Consumer Confidence (May)
June 1st Challenger Layoffs (May)
ADP Payroll Estimate (May)
Construction Spending (April)
ISM Manufacturing Index (May)
Motor Vehicle Sales (May)
June 2nd Jobless Claims (week ending May 28th)
Productivity (1Q11, revised)
June 3rd Employment Report (May)
ISM Non-Manufacturing Index (May)
June 8th Fed Beige Book
June 9th Trade Balance (April)
June 14th Retail Sales (May)
June 15th Consumer Price Index (May)
June 21st-22nd FOMC Meeting
Bernanke Press Conference

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 June 9th, 2011.

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


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