Clarksville, TN – With a thin economic calendar, Syria remained a key concern for the markets. However, prospects for a U.S. strike diminished, which helped bolster equity market sentiment. The bond market is looking ahead to the Fed policy meeting. In the bond market, expectations on tapering have solidified somewhat, with a moderate majority seeing a small initial reduction in the pace of asset purchases.
Retail sales for August disappointed (relative to expectations), but figures for June and July were revised a bit higher. Jobless claims were distorted due to upgrades in state computer systems, but the trend had been lower in August. Hiring intentions improved. Consumer sentiment softened.Next week, the focus will be on the Fed. Policymakers are generally expected to begin reducing the pace of asset purchases (starting in October), most likely with a $10 billion reduction in Treasury purchases (from $45 billion per month, to $35 billion) and no change in purchases of mortgage-backed securities (currently $40 billion per month).
The Fed ought to signal a wait-and-see attitude on further reductions (more likely in December, rather than in late October) and could reduce the 6.5% unemployment rate threshold (as a way to emphasis the forward guidance on short-term interest rates). While a tapering is generally expected, it may not be entirely factored into the markets.
Beyond the Fed meeting, the markets are likely to pay more attention to what’s happening in Washington. The government will need another Continuing Resolution by October 1st. Treasury has indicated that the debt ceiling will have to be raised before the second half of October.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.581||1.611|
|Dollars per Euro||1.331||1.289|
|Japanese Yen per Dollar||99.160||77.860|
|Canadian Dollars per Dollar||1.032||0.976|
|Mexican Peso per Dollar||13.071||13.016|
|10-year municipal (TEY)||4.98||4.62|
Treasury Yield Curve – 09/13/2013
S&P Sector Performance (YTD) – 09/13/2013
|Empire State Manufacturing Index (September)
Industrial Production (August)
|Consumer Price Index (August)
Homebuilder Sentiment (September)
|Building Permits, Housing Starts (August)
FOMC Policy Decision, Bernanke Press Briefing
|Jobless Claims (week ending September 14th)
Philadelphia Fed Index (September)
Leading Economic Indicators (August)
Existing Home Sales (August)
|Consumer Confidence (September)|
|Durable Goods Orders (August)|
|Continue Resolution needed|
|Employment Report (September)|
|Debt Ceiling becomes binding|
|FOMC Policy Decision, no 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 September 12th, 2013.