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The Weekly Market Snapshot from Frazier Allen for the week of September 30th, 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 mixed, but mostly disappointing. Consumer confidence improved in September and the Case-Shiller Home Price Index continued to rise. Real GDP rose at a 1.3% annual rate in the 3rd estimate for 2Q12 (vs. +1.7% in the 2nd estimate). Personal income rose 0.1% in August (+3.5% y/y). Spending rose 0.5%, but gasoline accounted for about 80% of that. The PCE Price Index rose 0.4% (+1.5% y/y), up 0.1% ex-food & energy (+1.6% y/y) – trending below the Fed’s 2% target. Durable goods orders plunged 13.2%, partly reflecting a drop in civilian aircraft orders (which went negative due to order cancelations).

However, ex-transportation, orders fell while revisions showed a larger drop in July. Shipments fell. Ex-transportation, unfilled orders fell for the third consecutive month (not a good sign). Inventory growth was faster in the first two months of the quarter (likely unintentional).

The financial market reactions to the data were somewhat disjointed. Investors also kept an eye on developments in Europe.

Next week, the economic calendar remains busy. The ISM Manufacturing Index is likely to set the tone for the week. With Obama moving ahead in recent polls of the key battleground states, the presidential debates will be critical for Romney’s campaign. The topic for Wednesday night’s debate is domestic policy. The financial markets are unlikely to respond much to what’s said. The Employment Report should be the week’s highlight. The Chicago teachers strike is expected to have no impact on nonfarm payrolls. Otherwise, expect “more of the same” – that is, moderate job growth, but not especially strong.

Indices

  Last Last Week YTD return %
DJIA 13485.97 13596.93 10.38%
NASDAQ 3136.60 3175.96 20.40%
S&P 500 1447.15 1460.26 15.07%
MSCI EAFE 1526.25 1545.77 8.05%
Russell 2000 843.54 851.51 13.85%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.08 0.10
30-year mortgage 3.41 4.09

Currencies

  Last 1-year ago
Dollars per British Pound 1.622 1.565
Dollars per Euro 1.290 1.360
Japanese Yen per Dollar 77.650 76.570
Canadian Dollars per Dollar 0.981 1.019
Mexican Peso per Dollar 12.839 13.367

Commodities

  Last 1-year ago
Crude Oil 91.85 84.45
Gold 1777.60 1657.43

Bond Rates

  Last 1-month ago
2-year treasury 0.23 0.24
10-year treasury 1.61 1.59
10-year municipal (TEY) 3.02 3.22

Treasury Yield Curve – 9/28/2012

Treasury Yield Curve – 9/28/2012

S&P Sector Performance (YTD) – 9/28/2012

S&P Sector Performance (YTD) – 9/28/2012

Economic Calendar

October 1st

 —

ISM Manufacturing Index (September)
October 2nd

 —

Motor Vehicle Sales (September)
October 3rd

 —

ADP Payroll Estimate (September)
ISM Non-Manufacturing Index (September)
First Presidential Debate (domestic policy)
October 4th

 —

Bank of England Policy Decision
European Central Bank Policy Decision
Jobless Claims (week ending 9/27th)
October 5th

 —

Employment Report (September)
October 8th

 —

Columbus Day Holiday (bond market closed)
October 10th

 —

Fed Beige Book
October 15th

 —

Retail Sales (September)
October 24th

 —

FOMC Policy Meeting (no press briefing)
November 6th

 —

Election Day

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 September 20th, 2012.

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


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