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Weekly Market Snapshot from Frazier Allen for the week of March 31st, 2013

 

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. Third quarter GDP growth rose at a 0.4% annual rate in 4Q12 (vs. +0.1% in the 2nd estimate and -0.1% in the advance estimate), but consumer spending growth was revised down (suggesting less momentum into 1Q13). Consumer confidence fell in March, with a sharp drop in expectations (which are thought to be a factor in big-ticket purchases). Durable goods orders jumped, reflecting a rebound in aircraft, but were mixed and generally soft otherwise. Home prices continued to rise. Weekly claims for unemployment benefits rose unexpectedly, which could signal a lagged impact from the payroll tax increase and higher gasoline prices, but it’s only one week.

The Dutch finance minister said that the Cyprus bank bailout could serve as a model for other countries, although he tried to walk those comments back shortly after. Most observers see the Cypriot bailout as a disaster and are now looking at the possibility of similar debacles in the smaller eurozone countries (Malta, Slovenia, perhaps even Luxembourg with its outsized banking industry). It’s going to be another long year for Europe.

The stock market continued to embrace the good economic news and downplay the bad. The bond market appears to have weighed the economic data more evenly and sees downside risks from Europe. The two markets often diverge for a while, but there may be reconciliation at some point (somebody’s going to be wrong).

Next week, we’ll get fresh economic figures for March. The ISM surveys have market-moving potential, but the focus should be on the employment data. The early consensus is looking for a moderate gain in nonfarm payrolls (around 195,000), with little impact from the sequester – but remember that monthly changes in payrolls are reported accurate to ±90,000. There’s strong speculation that the impact of the payroll tax hike and higher gasoline prices will show up in the data with a lag – this week’s figures may help to inform that debate.

Indices

  Last Last Week YTD return %
DJIA 14526.16 14421.49 10.85%
NASDAQ 3256.52 3222.60 7.85%
S&P 500 1562.85 1545.80 9.58%
MSCI EAFE 1668.52 1686.39 4.02%
Russell 2000 950.24 943.92 11.88%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.16 0.15
30-year mortgage 3.51 3.99

Currencies

  Last 1-year ago
Dollars per British Pound 1.512 1.597
Dollars per Euro 1.277 1.334
Japanese Yen per Dollar 94.430 83.140
Canadian Dollars per Dollar 1.017/td> 0.993
Mexican Peso per Dollar 12.339 12.667

Commodities

  Last 1-year ago
Crude Oil 96.58 107.33
Gold 1606.17 1684.55

Bond Rates

  Last 1-month ago
2-year treasury 0.24 0.24
10-year treasury 1.85 1.86
10-year municipal (TEY) 3.27 3.14

Treasury Yield Curve – 03/28/2013

Treasury Yield Curve – 03/28/2013

S&P Sector Performance (YTD) – 03/28/2013

S&P Sector Performance (YTD) – 03/28/2013

Economic Calendar

April 1st

 —

ISM Manufacturing Index (March)
April 2nd

 —

Motor Vehicle Sales (March)
April 3rd

 —

ADP Payroll Estimate (March)
ISM Non-Manufacturing Index (March)
April 5th

 —

Employment Report (March)
Trade Balance (February)
April 10th

 —

FOMC Minutes (March 20th)
April 12th

 —

Retail Sales (March)
April 26th

 —

Real GDP (1Q13, advance)
May 1st

 —

FOMC Policy Decision (no 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 March 27th, 2013.

©2013 Raymond James Financial Services, Inc. member FINRA / SIPC.


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