Market Commentary by Scott J. Brown, Ph.D., Chief Economist
The economic data were generally disappointing. Nonfarm payrolls rose by a disappointing 88,000 in March (median forecast: +200,000), up 759,000 before seasonal adjustment (vs. +901,000 in March 2012). Payroll figures for January and February were revised a net 61,000 higher (adjusted payrolls average a 168,000 monthly gain in 1Q13, roughly the same pace as the last two years).
Mild weather in February may have pulled forward some of March’s strength, but the slowdown could signal a lagged impact of the payroll tax increase. The unemployment rate fell to 7.6% (vs. 7.7% in February and 8.2% a year ago), but this was once again due to a decrease in labor force participation (participation should be rising if the labor market is strengthening, as individuals are lured back into the job market). The employment/population ratio edged down to 58.5%, trending roughly flat over the last few years.The week’s other data were mostly on the soft side of expectations. The ISM surveys both declined in March, still above the breakeven level, but suggesting somewhat slower growth. Unit motor vehicle sales held about steady on a seasonally adjusted basis. Weekly claims for unemployment insurance benefits jumped for the second consecutive week (after trending lower in the first two and a half months of the year).
Policy makers at the Bank of England and the European Central Bank stood pat. However, the Bank of Japan took a much more aggressive stance, targeting a doubling of the monetary pace and a 2% inflation rate in two years.
The stock market was volatile. Bond yields fell sharply.
Next week, the FOMC policy meeting minutes should renew focus on the Fed’s debate (about whether to reduce its asset purchases). The retail sales report should be relatively soft, held down partly by lower gasoline prices.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.520||1.588|
|Dollars per Euro||1.288||1.314|
|Japanese Yen per Dollar||96.170||82.640|
|Canadian Dollars per Dollar||1.013/td>||0.996|
|Mexican Peso per Dollar||12.334||12.821|
|10-year municipal (TEY)||3.22||3.09|
Treasury Yield Curve – 04/05/2013
S&P Sector Performance (YTD) – 04/05/2013
|Bernanke Speaks (“Bank Stress Tests”)
Trade Balance (February)
|Small Business Optimism Index (March)
Trade Balance (February)
|FOMC Minutes (March 20)|
|Jobless Claims (week ending April 6)|
|Producer Price Index (March)
Retail Sales (March)
|Consumer Price Index (March)
Housing Starts, Building Permits (March)
Industrial Production (March)
|Real GDP (1Q13, advance)|
|FOMC Policy Decision (no press briefing)|
|Employment Report (April)|
|FOMC Policy Decision, Bernanke Press Briefing|
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.
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 April 4th, 2013.