Market Commentary by Scott J. Brown, Ph.D., Chief Economist
The minutes of the March 13th Federal Open Market Committee meeting suggested reduced odds of another round of Fed asset purchases (QE3). That shouldn’t have been a surprise to anyone, but the news was taken negatively by the stock market and long-term Treasury yields snapped higher. The European Central Bank left rates changed, but ECP president Draghi seemed a bit hawkish in his post-meeting press conference, renewing concerns about the European financial crisis (I guess, it wouldn’t seem like spring otherwise).
The U.S. economic data (this is being written before the release of the March Employment Report) remained consistent with moderate growth. ISM figures were mixed, but both reports showed further growth in new orders and employment.
Next week, the stock market will get its chance to react to the March payroll figures. The inflation reports show up a little earlier than usual this month. Gasoline prices have risen – but the seasonal adjustment anticipates higher gasoline prices in March, which should dampen the impact on the headline PPI and CPI figures. Core inflation is likely to remain moderate.
Indices
 | Last | Last Week | YTD return % |
DJIA | 13074.75 | 13145.82 | 7.02% |
NASDAQ | 3068.09 | 3095.36 | 17.77% |
S&P 500 | 1398.96 | 1403.28 | 11.24% |
MSCI EAFE | 1512.53 | 1542.83 | 7.08% |
Russell 2000 | 820.38 | 832.22 | 10.72% |
Consumer Money Rates
 | Last | 1-year ago |
Prime Rate | 3.25 | 3.25 |
Fed Funds | 0.17 | 0.08 |
30-year mortgage | 4.04 | 4.83 |
Currencies
 | Last | 1-year ago |
Dollars per British Pound | 1.588 | 1.612 |
Dollars per Euro | 1.314 | 1.422 |
Japanese Yen per Dollar | 82.640 | 83.980 |
Canadian Dollars per Dollar | 0.996 | 0.968 |
Mexican Peso per Dollar | 12.821 | 11.860 |
Commodities
 | Last | 1-year ago |
Crude Oil | 101.47 | 108.47 |
Gold | 1618.69 | 1433.55 |
Bond Rates
 | Last | 1-month ago |
2-year treasury | 0.35 | 0.29 |
10-year treasury | 2.21 | 2.01 |
10-year municipal (TEY) | 3.29 | 2.84 |
Treasury Yield Curve – 4/05/2012
S&P Sector Performance (YTD) – 4/05/2012
Economic Calendar
April 9th |
 — |
Bernanke Speaks (financial regulation) |
April 10th |
 — |
Small Business Optimism Index (March) |
April 11th |
 — |
Import Prices (March) Fed Beige Book |
April 12th |
 — |
Jobless Claims (week ending April 7th) Producer Price Index (March) Trade Balance (February) |
April 13th |
 — |
Consumer Price Index (March) Industrial Production (March) Consumer Sentiment (mid-April) |
April 16th |
 — |
Retail Sales (March) |
April 25th |
 — |
FOMC Policy Decision Bernanke Press Briefing |
April 27th |
 — |
Real GDP (1Q12, advance estimate) |
May 4th |
 — |
Employment Report (April) |
Treasury Yield Curve – 3/30/2012
S&P Sector Performance (YTD) – 3/30/2012
Economic Calendar
April 1st |
— |
ISM Manufacturing Index (March) |
April 2nd |
— |
FOMC Minutes (March 13th) Motor Vehicle Sales (March) |
April 4th |
— |
ADP Payroll Estimate (March) ISM Non-Manufacturing Index (March) |
April 5th |
— |
Jobless Claims (week ending March 31st) |
April 6th |
— |
Good Friday (stock market closed, bonds open half a day) Employment Report (March) |
April 11th |
— |
Fed Beige Book |
April 12th |
— |
Producer Price Index (March) |
April 13th |
— |
Consumer Price Index (March) Industrial Production (March) |
April 25th |
— |
FOMC Policy Decision Bernanke Press Briefing |
April 27th |
— |
Real GDP (1Q12, advance estimate) |
June 20th |
— |
Bernanke Press Briefing |
Important Disclosures
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 April 4th, 2012.
©2012 Raymond James Financial Services, Inc. member FINRA / SIPC.