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Clarksville Weekly Market Snapshot from Frazier Allen for the week of October 22nd, 2013

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – As was widely anticipated, lawmakers reached an 11th-hour agreement on the budget and debt ceiling. The “Continuing Appropriations Act, 2014” funds the government through January 15th, suspends the debt ceiling to February 7th, and requests bipartisan House/Senate budget negotiations by December 13th.

Thus, while the deal dodges a near-term financial catastrophe, it does not remove uncertainty entirely. Lawmakers will have less than three months to agree on a new spending authorization.

Frazier Allen
Frazier Allen

Note that another round of sequester cuts (detested by both parties) is set for January 15th. The debt ceiling will go back into effect on February 7th, but Treasury can still take extraordinary measures to borrow for a few weeks and perhaps several months.

The federal government is back at work. The Bureau of Labor Statistics has announced a revised release schedule for delayed economic reports, but the timings of releases from other agencies are pending.

Federal workers will receive back pay, but private contractors who lost business due to the shutdown (for example, food service suppliers to the Smithsonian Museums) will not be paid.

The Fed cited uncertainty in Washington as one factor in the September decision to delay the initial reduction in the rate of asset purchases. The market sees the continued uncertainty as likely to prevent a December tapering (all else equal: lower bond yields and higher stock prices), but Fed action will depend on the economic data.

Next week, some of the delayed economic data reports will roll in. The September employment figures will be the most important. Note that there is some seasonal adjustment uncertainty in the September jobs data (due to the start of the school year) – so there’s a good chance for a surprise. Looking ahead, we can expect payrolls to take a hit in the report for October (now due on November 8th) and bounce back in November (data due December 6th).

Indices

  Last Last Week YTD return %
DJIA 15371.65 15126.07 17.30%
NASDAQ 3863.15 3760.75 27.94%
S&P 500 1733.15 1692.56 21.52%
MSCI EAFE 1863.81 1810.82 16.20%
Russell 2000 1102.27 1069.50 29.78%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.11 0.17
30-year mortgage 4.28 3.37

Currencies

  Last 1-year ago
Dollars per British Pound 1.616 1.615
Dollars per Euro 1.366 1.312
Japanese Yen per Dollar 97.910 78.780
Canadian Dollars per Dollar 1.029 0.980
Mexican Peso per Dollar 12.761 12.783

Commodities

  Last 1-year ago
Crude Oil 100.67 92.12
Gold 1321.45 1751.03

Bond Rates

  Last 1-month ago
2-year treasury 0.31 0.33
10-year treasury 2.58 2.75
10-year municipal (TEY) 4.48 4.80

Treasury Yield Curve – 10/18/2013

Treasury Yield Curve – 10/18/2013

S&P Sector Performance (YTD) – 10/18/2013

S&P Sector Performance (YTD) – 10/18/2013

Economic Calendar

October 21st

 —

Existing Home Sales (September)
October 22nd

 —

Employment Report (September)
October 24th

 —

Jobless Claims (week ending October 19th)
New Home Sales (September, tentative)
October 25th

 —

Durable Goods Orders (September, tentative)
October 29th

 —

Consumer Confidence (October)
October 30th

 —

Consumer Price Index (September)
Real GDP (3Q13, advance)
FOMC Policy Decision, no press briefing
November 8th

 —

Employment Report (October)

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 October 17th, 2013.

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

Frazier Allen
Frazier Allenhttp://www.raymondjames.com/frazierallen
Frazier Allen, WMS, CRPS, Financial Advisor with F&M Bank 50 Franklin Street | Clarksville, TN 37040 | 931-553-2048
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