Clarksville, TN – Stock market participants seemed only mildly concerned about escalating tensions in Ukraine, but were encouraged by comments from Fed Chair Janet Yellen. Yellen suggest that the Fed would respond to significant, surprising changes in the outlook for growth, inflation expectations, or financial conditions.
Short-term interest rates aren’t going to be raised for a while, but the first increase in rates could be pushed out if the Fed remains short of its goals (full employment, 2% inflation).
Industrial production rose more than expected, but that partly reflecting a continuation of below normal temperatures. Indeed, while industrial production rose at a 4.4% annual rate in 1Q14, most of that was in mining (a 9.5% annual rate) and utilities (a 17.9% pace).
Manufacturing output rose at a 1.7% annual rate in 1Q14, but is poised for a sharper rise in 2Q14. The Consumer Price Index rose a little more than expected in March, reflecting a 0.3% increase in shelter costs. Residential construction figures were mixed, but a bit disappointing.
Next week, financial market participants could react to any surprises in a number of data releases, but none of the reports will alter the overall economic picture. In contrast, April figures will begin arriving in the following week. The ISM Manufacturing Index and the Employment Report will help set near-term expectations for the economy.
Indices
| Last | Last Week | YTD return % | |
| DJIA | 16424.85 | 16170.22 | -0.92% |
| NASDAQ | 4086.23 | 4054.11 | -2.16% |
| S&P 500 | 1862.31 | 1833.08 | 0.75% |
| MSCI EAFE | 1904.98 | 1919.80 | -0.55% |
| Russell 2000 | 1131.77 | 1127.66 | -2.74% |
Consumer Money Rates
| Last | 1-year ago | |
| Prime Rate | 3.25 | 3.25 |
| Fed Funds | 0.08 | 0.10 |
| 30-year mortgage | 4.38 | 3.41 |
Currencies
| Last | 1-year ago | |
| Dollars per British Pound | 1.679 | 1.531 |
| Dollars per Euro | 1.384 | 1.310 |
| Japanese Yen per Dollar | 102.260 | 97.830 |
| Canadian Dollars per Dollar | 1.100 | 1.023 |
| Mexican Peso per Dollar | 13.059 | 12.210 |
Commodities
| Last | 1-year ago | |
| Crude Oil | 103.76 | 88.72 |
| Gold | 1303.97 | 1383.19 |
Bond Rates
| Last | 1-month ago | |
| 2-year treasury | 0.39 | 0.44 |
| 10-year treasury | 2.67 | 2.78 |
| 10-year municipal (TEY) | 4.31 | 4.38 |
Treasury Yield Curve – 4/17/2014
S&P Sector Performance (YTD) – 4/17/2014
Economic Calendar
| April 21st | — | Leading Economic Indicators (March) |
| April 22nd | — | Existing Home Sales (March) |
| April 23rd | — | New Home Sales (March) |
| April 24th | — | Jobless Claims (week ending April 19th) Durable Goods Orders (March) |
| April 29th | — | Consumer Confidence (April) |
| April 30th | — | Real GDP (1Q14, advance estimate) FOMC Policy Decision (no press conference) |
| May 1st | — | ISM Manufacturing Index (April) |
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 April 16th, 2013.
©2014 Raymond James Financial Services, Inc. member FINRA / SIPC.
