Clarksville, TN – With a thin economic calendar, U.S. investors typically focus on other things. Sometimes, that’s earnings reports (which have been generally good). Other times, it’s overseas developments.
While the economic situation seems to be improving in the United Kingdom and in Europe, the rest of the world is looking a bit shakier. There have been a number of concerns about individual countries in recent weeks (China, Turkey, Argentina, and so on), but these concerns appear to have now gelled into anxieties about emerging economies in general, which has weighed against U.S. stock market sentiment.Bond yields have declined, which should help support the economy in the near term (housing especially).
The U.S. outlook remains positive, with widespread expectations of a pickup in growth as economic headwinds fade.
However, for market participants, the key question is how much good news is already baked in. Note that the weather and seasonal adjustment often generate volatility in the economic data during the winter months. We may see the markets react to the noise.
Next week, U.S. investors can at least take some comfort in that the busy economic calendar will take the focus away from concerns about the rest of the world. We could easily see some surprises in the reports on new home sales (Monday) and durable goods orders (Tuesday).
President Barack Obama is reportedly going to stress income inequality in his State of the Union address on Tuesday evening. The FOMC is widely expected to trim another $10 billion from the monthly pace of asset purchases, but markets could react to any changes in the wording of the policy statement.
The initial GDP estimate for 4Q13, arriving a day later, is likely to be strong, but there’s a lot of uncertainty in the advance numbers. The fun won’t let up the following week, when we get the ISM survey results and employment figures.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.662||1.584|
|Dollars per Euro||1.368||1.331|
|Japanese Yen per Dollar||103.470||88.550|
|Canadian Dollars per Dollar||1.116||0.999|
|Mexican Peso per Dollar||13.398||12.658|
|10-year municipal (TEY)||4.45||4.51|
Treasury Yield Curve – 01/24/2014
S&P Sector Performance (YTD) – 01/24/2014
|New Home Sales (December)|
|Durable Goods Orders (December)
Consumer Confidence (January)
State of the Union Address
|Treasury FRN Auction
FOMC Policy Decision, no press briefing
|Jobless Claims (week ending January 25th)
Real GDP (4Q13, advance estimate)
Pending Home Sales Index (December)
|Employment Cost Index (4Q13)
Personal Income and Spending (January)
Chicago Purchasing Managers Index (January)
|ISM Manufacturing Index (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.