Clarksville, TN – The economic data reports were mixed and mostly ignored by the financial markets. Real GDP rose at a 2.6% annual rate in the 3rd estimate for 4Q13 (vs. +2.4% in the second estimate and +3.2% in the advance estimate).
Most of the story remained that same. Government subtracted a full percentage point from overall growth, but that was offset by a narrower trade deficit (which added a percentage point).
Inventory accumulation remained very brisk, although slightly slower than in 3Q13. However, consumer spending was revised to a 3.3% annual rate (vs. +2.6% in the 2nd estimate and +3.3% in the advance estimate), with most of that revision in healthcare.Personal income and spending rose about as expected in February, although the PCE Price Index, the Fed’s chief gauge of inflation, rose 0.9% y/y overall and +1.1% y/y ex-food & energy (vs. the Fed’s official goal of 2.0%).
Looking ahead, most of the economic data reports for March and April are expected to reflect a rebound from adverse weather in January and February. Hence, the numbers may make growth look stronger than it really is. As a simple rule, one can take the average of recent months to approximate the underlying trend.
Next week, fresh March figures will arrive. The focus is likely to be on the ISM Manufacturing Index (Tuesday) and the Employment Report (Friday). Seasonal adjustment can be a bit tricky in March. Economic activity, including job growth, typically ramps up in the spring (we can expect to add between 800,000 and 900,000 jobs in March before seasonal adjustment).
While the job market has shown signs of steady improvement over the last few years, we’re still a long way from a full recovery. Fed Chair Yellen’s speech on Monday is not expected to be market-moving (but you never know). Keep an eye out for any developments on the Ukraine/Russia border.
Indices
Last | Last Week | YTD return % | |
DJIA | 16264.23 | 16331.05 | -1.88% |
NASDAQ | 4151.23 | 4319.286 | -0.61% |
S&P 500 | 1849.04 | 1872.01 | 0.04% |
MSCI EAFE | 1892.86 | 1864.01 | -1.19% |
Russell 2000 | 1151.44 | 1198.97 | -1.05% |
Consumer Money Rates
Last | 1-year ago | |
Prime Rate | 3.25 | 3.25 |
Fed Funds | 0.07 | 0.04 |
30-year mortgage | 4.40 | 3.57 |
Currencies
Last | 1-year ago | |
Dollars per British Pound | 1.662 | 1.512 |
Dollars per Euro | 1.375 | 1.277 |
Japanese Yen per Dollar | 102.160 | 94.430 |
Canadian Dollars per Dollar | 1.106/td> | 1.017 |
Mexican Peso per Dollar | 13.092 | 12.339 |
Commodities
Last | 1-year ago | |
Crude Oil | 101.28 | 96.58 |
Gold | 1292.06 | 1606.17 |
Bond Rates
Last | 1-month ago | |
2-year treasury | 0.45 | 0.33 |
10-year treasury | 2.70 | 2.66 |
10-year municipal (TEY) | 4.15 | 4.45 |
Treasury Yield Curve – 3/28/2014
S&P Sector Performance (YTD) – 3/28/2014
Economic Calendar
March 31 |
— |
Yellen Speaks (“Strengthening Communities”) Chicago Purchasing Managers Index (March) |
April 1 |
— |
SM Manufacturing Index (March) Motor Vehicle Sales (March) |
April 2 |
— |
ADP Payroll Estimate |
April 3 |
— |
Jobless Claims (week ending March 29) ISM Non-Manufacturing Index (March) |
April 4 |
— |
Employment Report (March) |
April 14 |
— |
Retail Sales (March) |
April 18 |
— |
Good Friday (markets closed) |
April 30 |
— |
Real GDP (1Q14, advance estimate) FOMC Policy Decision (no press conference) |
Important Disclosures
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 March 27th, 2013.
©2014 Raymond James Financial Services, Inc. member FINRA / SIPC.