Market Commentary by Scott J. Brown, Ph.D., Chief Economist
The economic data were mixed. Homebuilder sentiment continued to improve. Existing home sales rose 7.9% in August (+24.5% y/y). Housing starts and building permits were mixed in August, but continued to reflect an improving trend in single-family construction (permits up 19.3% y/y). The Fed’s two key regional manufacturing surveys were mixed, but remained weak.
Intraday volatility increased in the stock market as investors tried to weigh the Fed’s recent actions (and promise to do more if need) against the near-term headwinds and downside risks.
Next week, the financial markets could react to any surprises in the reports on consumer confidence and durable goods orders. Little change is expected in the third estimate of 2Q12 GDP growth (“ancient history” at this point). However, Friday’s personal income and spending figures, while not a major market-mover, will help fill in the picture for 3Q12 GDP growth.
Given the Fed’s emphasis on the job market, financial market participants are likely to look ahead to the September Employment Report (due October 5th).
Indices
 | Last | Last Week | YTD return % |
DJIA | 13596.93 | 13539.86 | 11.29% |
NASDAQ | 3175.96 | 3155.83 | 21.91% |
S&P 500 | 1460.26 | 1459.99 | 16.11% |
MSCI EAFE | 1545.77 | 1531.29 | 9.43% |
Russell 2000 | 851.51 | 856.12 | 14.93% |
Consumer Money Rates
 | Last | 1-year ago |
Prime Rate | 3.25 | 3.25 |
Fed Funds | 0.16 | 0.10 |
30-year mortgage | 3.51 | 4.13 |
Currencies
 | Last | 1-year ago |
Dollars per British Pound | 1.619 | 1.572 |
Dollars per Euro | 1.294 | 1.368 |
Japanese Yen per Dollar | 78.310 | 76.500 |
Canadian Dollars per Dollar | 0.978 | 0.993 |
Mexican Peso per Dollar | 12.913 | 13.198 |
Commodities
 | Last | 1-year ago |
Crude Oil | 91.87 | 86.89 |
Gold | 1768.70 | 1803.13 |
Bond Rates
 | Last | 1-month ago |
2-year treasury | 0.26 | 0.26 |
10-year treasury | 1.77 | 1.67 |
10-year municipal (TEY) | 3.18 | 3.11 |
Treasury Yield Curve – 9/21/2012
S&P Sector Performance (YTD) – 9/21/2012
Economic Calendar
September 25th |
 — |
S&P/Case-Shiller Home Price Index (July) Consumer Confidence (September) |
September 26th |
 — |
New Home Sales (August) |
September 27th |
 — |
Jobless Claims (week ending September 22nd) Real GDP (2Q12, 3rd estimate) Durable Goods Orders (August) Pending Home Sales Index (August) |
September 28th |
 — |
Personal Income and Spending (August) Chicago Purchasing Managers Index (September) Consumer Sentiment (September) |
October 1st |
 — |
ISM Manufacturing Index (September) |
October 3rd |
 — |
First Presidential Debate |
October 5th |
 — |
Employment Report (September) |
October 24th |
 — |
FOMC Policy Meeting (no 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 September 20th, 2012.
©2012 Raymond James Financial Services, Inc. member FINRA / SIPC.