Clarksville, TN – There were few surprises in the economic data reports. Retail sales, industrial production, and the Consumer Price Index were all relatively close to expectations. Retail sales slowed in December, reflecting a pullback in unit auto sales, up moderately otherwise (weakness in department store sales were offset by stronger e-tail activity).
Industrial production rose 0.3%, held back by a drop in the output of utilities, but factory output accelerated in 4Q13, following a soft trend in the first three quarters of 2013 (consistent with improving trends in factory payrolls and new orders). Residential construction figures disappointed, but it’s hard to get too worked up about December data (which can be exaggerated due to the weather and seasonal adjustment).With his time as Fed chairman ticking down, Ben Bernanke again defended the Fed’s actions during the financial crisis and the extraordinary policy measures undertaken since. He seems very happy on his way out the door, and little change should be expected from Janet Yellen.
Next week, Monday’s a holiday and the economic calendar is thin. None of the reports is going to have an impact on the bigger economic picture. Investors are likely to look ahead to the next couple of weeks. The recent economic data, while mixed, are unlikely to prevent the Fed from tapering the pace of asset purchases further (expect another $10 billion reduction).
Fed officials expect growth to pick up in 2014. They could slow the rate of tapering if the economic data weaken, but officials see asset purchases as less effective and more risky the longer they last. Tapering need not lead to tears (higher bond yields), as the Fed continues to emphasize that short-term rates are going to remain low for a long time
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.634||1.599|
|Dollars per Euro||1.359||1.328|
|Japanese Yen per Dollar||104.400||88.510|
|Canadian Dollars per Dollar||1.092||0.986|
|Mexican Peso per Dollar||13.284||12.635|
|10-year municipal (TEY)||4.49||4.46|
Treasury Yield Curve – 01/17/2014
S&P Sector Performance (YTD) – 01/17/2014
|MLK, Jr. Holiday (markets closed)|
|Jobless Claims (week ending January 18th)
Existing Home Sales (December)
Leading Economic Indicators (December)
|New Home Sales (December)|
|Durable Goods Orders (December)
Consumer Confidence (January)
State of the Union Address
|FOMC Policy Decision, no press briefing|
|Real GDP (4Q13, advance estimate)
Pending Home Sales Index (December)
|Personal Income and Spending (January)|
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 January 16th, 2013.