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Weekly Market Snapshot from Frazier Allen for the week of June 30th, 2013


Weekly Market Snapshot

Market Commentary by Scott J. Brown, Ph.D., Chief Economist

Scott J. Brown Ph.D., Chief Economist Raymond James Investment ServicesFederal Reserve officials were out in force trying to soothe market fears. A range of Fed comments had added to market uncertainty in previous weeks, but officials are now singing out of the same page of the hymnal. The message: there was no change in the Fed’s monetary policy intentions last week.

Bernanke was merely clarifying the Fed’s decision-making process. Future policy moves will remain data-dependent. If the economic data come in weaker than anticipated, any reduction in the pace of the Fed’s asset purchases would be pushed out. Tapering is not tightening.

As the Fed slows the rate of asset purchases, it would still be added accommodation. The Fed expects to hold these securities for a long time, maintaining policy accommodation. A rise in the federal funds rate target is still a long way off. Most Fed officials expect the first increase in 2015. Equities rose and bond yields declined.

The economic data were mixed. The estimate of first quarter GDP growth was revised down (to 1.8% in the 3rd estimate, vs. 2.4% in the 2nd estimate). Large revisions between the 2nd and 3rd estimates are rare. Most of the revision was in the key components: Consumer spending rose at a 2.6% pace (vs. +3.4% in the 2nd estimate) and business fixed investment rose 0.4% (vs. +2.2%).

Consumer confidence improved. The pace of new home sales increased. Home prices continued to rise. Durable goods orders reflected a further surge in aircraft, mixed but moderate gains otherwise. Personal income rose more than expected in May, with strong gains in income from assets. However, inflation-adjusted consumer spending (70% of GDP) appears to be on track for about a 1.6% annual rate in 2Q13.

Next week, the ISM manufacturing data are expected to set the tone early in the week. The markets close early on Wednesday. Nonfarm payrolls are expected to post a moderately strong gain in June. The unemployment rate is likely to edge a bit lower. Fed officials have emphasized the cumulative improvement in the unemployment rate since QE3 began, not the latest employment figures.


  Last Last Week YTD return %
DJIA 15024.49 14758.32 14.65%
NASDAQ 3401.86 3364.64 12.66%
S&P 500 1613.20 1588.19 13.11%
MSCI EAFE 1637.32 1636.93 2.08%
Russell 2000 979.92 960.52 15.37%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.03 0.17
30-year mortgage 4.46 3.66


  Last 1-year ago
Dollars per British Pound 1.525 1.557
Dollars per Euro 1.303 1.248
Japanese Yen per Dollar 98.210 79.750
Canadian Dollars per Dollar 1.048 1.025
Mexican Peso per Dollar 13.027 13.591


  Last 1-year ago
Crude Oil 97.05 80.21
Gold 1225.08 1574.73

Bond Rates

  Last 1-month ago
2-year treasury 0.36 0.30
10-year treasury 2.52 2.16
10-year municipal (TEY) 4.57 3.20

Treasury Yield Curve – 06/28/2013

Treasury Yield Curve – 06/28/2013

S&P Sector Performance (YTD) – 06/28/2013

 S&P Sector Performance (YTD) – 06/28/2013

Economic Calendar

July 1st


ISM Manufacturing Index (June)
July 2nd


Factory Orders (May)
Motor Vehicle Sales (June)
July 3rd


ADP Payroll Estimate (June)
Jobless Claims (week ending June 29th)
Trade Balance (May)
ISM Non-Manufacturing Index (June)
Financial markets close early
July 4th


Independence Day Holiday (markets closed)
July 5th


Employment Report (June)
July 10th


FOMC Minutes (June 18th-19th)
July 12th


Producer Price Index (June)
July 15th


Retail Sales (June)
July 31st


Real GDP (advance 2Q13 + comprehensive revisions)
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 May 31st, 2013.

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

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