Market Commentary by Scott J. Brown, Ph.D., Chief Economist
On Wednesday, the news from Europe was mixed. Euro area GDP figures for the first quarter were revised lower. Spain indicated that it needs help. The European Central Bank failed to cut rates (as some had hoped). However, European leaders were reported to be working up a plan on Spain and ECB President Draghi hinted at further support to come.
The Fed Beige Book noted that “overall economic activity expanded at a moderate pace” from early April to late May – an upbeat assessment relative to expectations. After the close, Fed Vice Chairman Janet Yellen said that “the economy remains vulnerable to setbacks,” adding that there is scope for the Fed to provide further monetary policy accommodation should the economy weaken or if inflation is expected to trend below the 2% target.
Indices
| Â | Last | Last Week | YTD return % |
| DJIA | 12460.96 | 12393.45 | 1.99% |
| NASDAQ | 2831.02 | 2827.34 | 8.67% |
| S&P 500 | 1314.99 | 1310.33 | 4.56% |
| MSCI EAFE | 1361.94 | 1332.89 | -3.58% |
| Russell 2000 | 760.34 | 761.82 | 2.62% |
Consumer Money Rates
| Â | Last | 1-year ago |
| Prime Rate | 3.25 | 3.25 |
| Fed Funds | 0.17 | 0.10 |
| 30-year mortgage | 3.68 | 4.49 |
Currencies
| Â | Last | 1-year ago |
| Dollars per British Pound | 1.555 | 1.643 |
| Dollars per Euro | 1.257 | 1.468 |
| Japanese Yen per Dollar | 79.600 | 80.150 |
| Canadian Dollars per Dollar | 1.025 | 0.974 |
| Mexican Peso per Dollar | 13.978 | 11.729 |
Commodities
| Â | Last | 1-year ago |
| Crude Oil | 84.82 | 99.09 |
| Gold | 1592.85 | 1542.35 |
Bond Rates
| Â | Last | 1-month ago |
| 2-year treasury | 0.27 | 0.26 |
| 10-year treasury | 1.59 | 1.85 |
| 10-year municipal (TEY) | 3.05 | 3.06 |
Treasury Yield Curve – 6/08/2012
S&P Sector Performance (YTD) – 6/08/2012
Economic Calendar
| June 13th |
 — |
Retail Sales (May) |
| June 14th |
 — |
Consumer Price Index (May) |
| June 15th |
 — |
Industrial Production (May) |
| June 17th |
 — |
Greece Votes |
| June 20th |
 — |
FOMC Policy Decision Bernanke Press Briefing |
| July 4th |
 — |
Independence Day (markets closed) |
| July 6th |
 — |
Employment Report (June) |
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 June 7th, 2012.
©2012 Raymond James Financial Services, Inc. member FINRA / SIPC.
