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The Weekly Market Snapshot from Frazier Allen for the week of July 8th, 2012

 

Weekly Market Snapshot

Market Commentary by Scott J. Brown, Ph.D., Chief Economist

Scott J. Brown Ph.D., Chief Economist Raymond James Investment ServicesThe economic data were disappointing, but generally consistent with moderate growth in the near term. Nonfarm payrolls rose by a disappointing 80,000 in June, not far from the median forecast of +100,000. Seasonal adjustment is difficult in June, so one should take the figure with a grain of salt. However, it does raise concerns that uncertainties (the election, the fiscal cliff, Europe) may be weighing against new hiring.

There were a number of positive elements in the report. Average weekly hours advanced. Hourly and weekly earnings are now outpacing inflation, which should provide some support for consumer spending growth in the near term. Temp help employment continued to rise, suggesting that employers are still somewhat cautious, but such a rise typically presages a pickup in permanent hiring.

The European summit in late June had a better than expected outcome, which means that European leaders dodged another bullet. However, while Europe may have been pushed to the back burner for U.S. investors, it’s still on the stove and likely to heat up again before long. Borrowing costs for Italy and Spain rose during the week, suggesting ongoing concerns.

Next week, the economic calendar thins out. May trade figures will help fill in the picture for 2Q12 GDP growth – however, exports are expected to soften in the months ahead as the global economy cools. The Producer Price Index is expected to reflect disinflationary pressure in June – the seasonal adjustment will offset much of the drop in wholesale gasoline prices. The June 19th-20th FOMC minutes may yield some insights into the likelihood that the Fed will undertake further accommodation (QE3). The following week will be more eventful.

Indices

  Last Last Week YTD return %
DJIA 12896.67 12602.26 5.56%
NASDAQ 2976.12 2849.49 14.24%
S&P 500 1367.58 1329.04 8.75%
MSCI EAFE 1429.12 1373.62 1.17%
Russell 2000 817.43 775.89 10.33%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.18 0.10
30-year mortgage 3.67 4.58

Currencies

  Last 1-year ago
Dollars per British Pound 1.553 1.607
Dollars per Euro 1.239 1.447
Japanese Yen per Dollar 79.920 81.140
Canadian Dollars per Dollar 1.014 0.961
Mexican Peso per Dollar 13.362 11.621

Commodities

  Last 1-year ago
Crude Oil 87.22 96.89
Gold 1606.23 1510.45

Bond Rates

  Last 1-month ago
2-year treasury 0.27 0.27
10-year treasury 1.54 1.59
10-year municipal (TEY) 3.14 3.00

Treasury Yield Curve – 7/6/2012

Treasury Yield Curve – 7/6/2012

 S&P Sector Performance (YTD) – 7/6/2012

S&P Sector Performance (YTD) – 7/6/2012

Economic Calendar

July 10th

 —

Small Business Optimism (June)
July 11th

 —

Trade Balance (May)
FOMC Minutes (June 19th-20th)
July 12th

 —

Jobless Claims (week ending July 7th)
Import Prices (June)
July 13th

 —

Producer Price Index (June)
July 16th

 —

Retail Sales (June)
Empire State Manufacturing Index (July)
Business Inventories (July)
July 17th

 —

Consumer Price Index (June)
Industrial Production (June)
Homebuilder Sentiment (July)
Bernanke Monetary Policy Testimony (Senate)
July 18th

 —

Building Permits, Housing Starts (June)
Bernanke Monetary Policy Testimony (House)
Fed Beige Book
July 19th

 —

Philly Fed Index (July)
Leading Economic Indicators (June)
Existing Home Sales (June)
August 1st

 —

Fed Policy Decision
(No Bernanke press briefing)
August 3rd

 —

Employment Report (July)

Treasury Yield Curve – 6/29/2012

Treasury Yield Curve – 6/29/2012

S&P Sector Performance (YTD) – 6/29/2012

S&P Sector Performance (YTD) – 6/29/2012

Economic Calendar

July 2nd

Markit Manufacturing PMI (June)
ISM Manufacturing Index (June)
July 3rd

Motor Vehicle Sales (June)
July 4th

Independence Day (markets closed)
July 5th

Bank of England Policy Meeting
European Central Bank Policy meeting
ADP Payroll Estimate (June)
ISM Non-Manufacturing Index (June)
July 6th

Employment Report (June)
July 11th

FOM Minutes (June 19th-20th)
July 12th

Trade Balance (May)
July 13th

Producer Price Index (June)
July 16th

Retail Sales (June)
August 1st

Fed Policy Decision
(No Bernanke press briefing)

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 5th, 2012.

©2012 Raymond James Financial Services, Inc. member FINRA / SIPC.


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