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The Weekly Market Snapshot from Frazier Allen for the week of July 10th

 

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 June Employment Report was weaker than expected, with no bright spots. Nonfarm payrolls rose just 18,000, while the two previous months were revised a net 44,000 lower. Private-sector payrolls rose by 57,000 – a 65,000 average for May and June, following a +240,000 average for February, March, and April. Manufacturing rose by 6,000. Construction fell by 9,000. Retail added 5,200. State and local government payrolls dropped another 25,000 (following -46,000 in May) and the federal government shed 14,000 (ex-census, down 18,000, or 0.6%, from a year ago). The unemployment rate edged up to 9.2% (from 9.1% in May) and the employment/population ratio slipped to 58.2% (vs. 58.4% in May and 58.5% a year ago). Average weekly hours edged down to 34.3 (from 34.4). Average hourly earnings were essentially unchanged (up 1.9% y/y). Average weekly earnings fell 0.3% (+2.1% y/y).

In the last couple of weeks, stock market participants have generally embraced good economic reports and looked past the bad. However, the June jobs data were hard to ignore. Following a stronger-than-expected ADP report of private-sector payrolls, the markets were led to expect a relatively strong jobs report from the Bureau of labor Statistics. This wasn’t the first time that the ADP numbers faked out the market. Caught leaning the other way, equities fell on the news and bonds rallied.

Next week, the focus should be on Bernanke’s monetary policy testimony, although we’re unlikely to learn much new from the Fed chairman (following the release of the Fed’s economic projections and Bernanke’s press briefing in late June). The mid-month economic reports will be important, with an emphasis on the retail sales and CPI reports. Retail sales may be a mixed bag in June (unit auto sales were reported lower, but chain-stores reported better-than-expected results). Lower gasoline prices should dominate the CPI in June, pushing the headline figure slightly into negative territory. While the core CPI picked up in the first half of the year, we should see the pace fall back in the second half.

Indices

  Last Last Week YTD return %
DJIA 12719.49 12414.34 9.86%
NASDAQ 2872.66 2773.52 8.28%
S&P 500 1353.22 1320.64 7.60%
MSCI EAFE 1718.77 1708.08 3.65%
Russell 2000 858.11 827.43 9.50%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.10 0.10
30-year mortgage 4.59 4.61

Currencies

  Last 1-year ago
Dollars per British Pound 1.597 1.519
Dollars per Euro 1.435 1.261
Japanese Yen per Dollar 81.220 87.210
Canadian Dollars per Dollar 0.959 1.051
Mexican Peso per Dollar 11.572 12.871

Commodities

  Last 1-year ago
Crude Oil 98.67 74.07
Gold 1528.65 1198.05

Bond Rates

  Last 1-month ago
2-year treasury 0.38 0.41
10-year treasury 3.03 2.97
10-year municipal (TEY) 4.29 3.95

Treasury Yield Curve – 7/08/2011

 Treasury Yield Curve – 7/08/2011

S&P Sector Performance (YTD) – 7/08/2011

S&P Sector Performance (YTD) – 7/08/2011

Economic Calendar

July 12th

 — 

Small Business Optimism (June)
Import Prices (June)
Trade Balance (May)
FOMC Minutes (June 21st-22nd)
July 13th

 — 

Bernanke Monetary Policy Testimony
July 14th

 — 

Jobless Claims (week ending July 9th)
Producer Price Index (June)
Retail Sales (June)
Bernanke Monetary Policy Testimony (Senate)
July 15th

 — 

Consumer Price Index (June)
Empire State Manufacturing Index (July)
Industrial Production (June)
Consumer Sentiment (mid-July)
July 19th

 — 

Building Permits, Housing Starts (June)
July 20th

 — 

Existing Home Sales (June)
July 29th

 — 

Real GDP (2Q11 advance estimate)
August 5th

 — 

Employment Report (July)
August 9th

 — 

FOMC Meeting (no 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 July 7th, 2011.

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


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