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Weekly Market Snapshot from Frazier Allen for the week of May 7th, 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 reports were mixed. The ISM surveys were on the weak side of expectations. Consumer confidence improved in April, but has remained range-bound with a low trend in recent months. The ADP payroll estimate for April disappointed, but the Employment Report was stronger than anticipated. Nonfarm payrolls rose by 165,000, better than the median forecast (+150,000), but more importantly, not as bad as feared. Payroll figures for February and March were revised a net 114,000 higher.

The unemployment rate edged down to 7.5% (from 7.6% in March and 8.1% a year ago) and for once that was not due to a decrease in labor force participation. The employment/population ratio edged up, but the trend has remained flat over the last few years. The April payroll figures helped boost share prices.

The Federal Open Market Committee left short-term interest rates and the asset purchase program unchanged, no surprise. In its policy statement, the FOMC noted that “fiscal policy is restraining economic growth.” While much of the recent debate has been about when to begin tapering the pace of asset purchases, the FOMC indicated that it is “prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.” The FOMC minutes helped fuel a rally in bonds, but yields snapped higher following the April employment figures.

Next week, the economic calendar thins out considerably. Fed Chairman Bernanke speaks on Friday regarding “monitoring finance.” One concern for the Fed is that its policies may fuel excessive risk-taking, which could then unravel unpleasantly at some point. Bernanke is expected to give us an update on what the Fed sees, with some implications for when policymakers may begin to taper the rate of asset purchases. Treasury budget figures for April will be released on Friday afternoon. These should show a sizable surplus (reflecting higher tax payments).

Indices

  Last Last Week YTD return %
DJIA 14831.58 14700.80 13.18%
NASDAQ 3340.62 3289.99 10.63%
S&P 500 1597.59 1585.16 12.02%
MSCI EAFE 1737.37 1728.51 8.31%
Russell 2000 939.85 940.28 10.66%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.15 0.16
30-year mortgage 3.40 3.84

Currencies

  Last 1-year ago
Dollars per British Pound 1.553 1.620
Dollars per Euro 1.307 1.317
Japanese Yen per Dollar 98.030 80.200
Canadian Dollars per Dollar 1.008 0.987
Mexican Peso per Dollar 12.166 12.952

Commodities

  Last 1-year ago
Crude Oil 93.99 105.22
Gold 1469.16 1653.48

Bond Rates

  Last 1-month ago
2-year treasury 0.21 0.22
10-year treasury 1.72 1.69
10-year municipal (TEY) 2.91 3.25

Treasury Yield Curve – 05/03/2013

Treasury Yield Curve – 05/03/2013

S&P Sector Performance (YTD) – 05/03/2013

S&P Sector Performance (YTD) – 05/03/2013

Economic Calendar

May 9th

 —

Jobless Claims (week ending May 4th)
May 10th

 —

Bernanke Speaks (“monitoring finance”)
Treasury Budget (April)
May 13th

 —

Retail Sales (April)
May 13th

 —

Retail Sales (April)
May 15th

 —

Producer Price Index (April)
Industrial Production (April)
May 16th

 —

Consumer Price Index (April)
Residential Construction (April)
May 27th

 —

Memorial Day Holiday – markets closed
June 7th

 —

Employment Report (May)
June 19th

 —

FOMC Policy Decision, Bernanke 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 May 2nd, 2013.

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


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