Market Commentary by Scott J. Brown, Ph.D., Chief Economist
Federal Reserve Governor Jeremy Stein fell short of declaring that credit markets are overheating, but suggested that an extended period of low interest rates could lead to the taking on of greater duration of credit risks, or to employment of greater leverage in a “reach for yield.” He said that the Fed must monitor the financial markets closely and could address signs of excessive risk-taking through regulatory efforts or through monetary policy.
Next week, President Barack Obama will deliver his State of the Union Address on Tuesday evening (which is also Mardi Gras). Most likely, the President will ask that Congress postpone the sequester through the end of the year. Note that it’s not costless to do so – there has to be an offsetting increase in revenues (possibly closed loopholes) or reduction in other types of spending (say, reduced farm subsidies). The reports on retail sales and industrial production have some market-moving potential, but seasonal adjustment could exaggerate what would otherwise be minor shifts in the data.
Indices
Last | Last Week | YTD return % | |
DJIA | 13944.05 | 13860.58 | 6.41% |
NASDAQ | 3165.13 | 3142.13 | 4.82% |
S&P 500 | 1509.39 | 1498.11 | 5.83% |
MSCI EAFE | 1661.10 | 1687.33 | 3.56% |
Russell 2000 | 908.10 | 902.09 | 6.92% |
Consumer Money Rates
Last | 1-year ago | |
Prime Rate | 3.25 | 3.25 |
Fed Funds | 0.15 | 0.10 |
30-year mortgage | 3.53 | 3.87 |
Currencies
Last | 1-year ago | |
Dollars per British Pound | 1.570 | 1.590 |
Dollars per Euro | 1.340 | 1.326 |
Japanese Yen per Dollar | 93.490 | 76.870 |
Canadian Dollars per Dollar | 0.999/td> | 0.995 |
Mexican Peso per Dollar | 12.711 | 12.629 |
Commodities
Last | 1-year ago | |
Crude Oil | 95.83 | 98.41 |
Gold | 1671.25 | 1746.45 |
Bond Rates
Last | 1-month ago | |
2-year treasury | 0.25 | 0.25 |
10-year treasury | 1.96 | 1.90 |
10-year municipal (TEY) | 3.09 | 3.05 |
Treasury Yield Curve – 02/08/2013
S&P Sector Performance (YTD) – 02/08/2013
Economic Calendar
February 12th |
— |
State of the Union Address |
February 13th |
— |
Import Prices (January) Retail Sales (January) |
February 14th |
— |
Jobless Claims (week ending February 9th) Retail Sales (January) |
February 15th |
— |
Industrial Production (January) |
February 18th |
— |
Presidents Day Holiday (markets closed) |
February 20th |
— |
FOMC minutes (January 29th-30th) |
February 28th |
— |
Real GDP (4Q12, 2nd estimate) |
March 8th |
— |
Employment Report (February) |
March 20th |
— |
FOMC Policy Decision, 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 February 7th, 2013.
©2013 Raymond James Financial Services, Inc. member FINRA / SIPC.