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The Weekly Market Snapshot from Frazier Allen for the week of July 17th

 

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

Tensions increase around the federal debt ceiling. Moody’s and Standard & Poor’s indicated that the U.S.’ credit rating could be reduced if the debt ceiling isn’t raised. A downgrade would send ripples throughout the financial markets. The markets did not seem too concerned, apparently on the strong belief that the debt ceiling would be raised in time to avoid a self-inflicted financial market calamity.

The key paragraph from the June 22nd-23rd FOMC Minutes: “On the one hand, a few members noted that, depending on how economic conditions evolve, the Committee might have to consider providing additional monetary policy stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run. On the other hand, a few members viewed the increase in inflation risks as suggesting that economic conditions might well evolve in a way that would warrant the Committee taking steps to begin removing policy accommodation sooner than currently anticipated.” In his monetary policy testimony, Chairman Bernanke presented a balanced outlook on monetary policy, but the markets only focused on the possibility of further asset purchases.

The economic data reports were mostly close to expectations. Retail sales were sluggish in June. Lower energy prices pushed the headline CPI down, but core inflation was slightly higher than expected (a key factor in preventing another Fed asset purchase program.)

Next week, the economic calendar thins out. Housing figures are expected to remain weak. Hopefully, we will see an agreement to raise the debt ceiling early in the week.

Indices

  Last Last Week YTD return %
DJIA 12437.12 12719.49 7.42%
NASDAQ 2762.67 2872.66 4.14%
S&P 500 1308.87 1353.22 4.07%
MSCI EAFE 1666.87 1718.77 0.52%
Russell 2000 823.32 858.11 5.06%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.10 0.21
30-year mortgage 4.48 4.61

Currencies

  Last 1-year ago
Dollars per British Pound 1.613 1.526
Dollars per Euro 1.416 1.276
Japanese Yen per Dollar 79.080 88.430
Canadian Dollars per Dollar 0.960 1.032
Mexican Peso per Dollar 11.731 12.705

Commodities

  Last 1-year ago
Crude Oil 95.69 77.04
Gold 1589.15 1204.30

Bond Rates

  Last 1-month ago
2-year treasury 0.37 0.37
10-year treasury 2.98 2.94
10-year municipal (TEY) 4.06 4.07

Treasury Yield Curve – 7/15/2011

 Treasury Yield Curve – 7/15/2011

S&P Sector Performance (YTD) – 7/15/2011

 S&P Sector Performance (YTD) – 7/15/2011

Economic Calendar

July 18th

 — 

Homebuilder Sentiment (July)
July 19th

 — 

Building Permits, Housing Starts (June)
July 20th

 — 

Existing Home Sales (June)
July 21st

 — 

Jobless Claims (week ending July 16th)
Philadelphia Fed Index (July)
Leading Economic Indicators (June)
July 26th

 — 

Consumer Confidence (July)
July 27th

 — 

Durable Goods Orders (June)
Fed Beige Book
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 14th, 2011.

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


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