Clarksville, TN – The few economic releases were generally positive and reports on corporate earnings were mostly on the high side of expectations, but the stock market seemed to pay little attention. Geopolitical tensions (Russia/Ukraine, Iraq, Israel/Hamas) and the ongoing Fed policy debate set market participants on edge.
Geopolitical concerns helped push global bond yields sharply lower. The U.S. Treasury note yield fell below 2.40%.News that Russian troops were massing on the eastern border of Ukraine spooked investors, but reports that Russian President Putin might looking for a way to scale back tensions were taken well by the market.
President Obama said the U.S. would engage militarily with Sunni militants in Iraq, which sent U.S. equity futures lower on Thursday evening, but the market still managed to open higher on Friday morning.
Next week, the economic calendar picks up, but the only major item is retail sales. Strong job growth has contributed to growth in aggregate wage income, fueling consumer spending. However, average wages are struggling to keep up with inflation (even though inflation is trending low).
Lackluster growth in average wages ought to be a limiting factor for consumer spending growth in the second half of the year. Retail sales account for about a third of consumer spending, which accounts for 70% of Gross Domestic Product.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.686||1.545|
|Dollars per Euro||1.338||1.329|
|Japanese Yen per Dollar||102.300||97.280|
|Canadian Dollars per Dollar||1.092||1.043|
|Mexican Peso per Dollar||13.238||12.653|
|10-year municipal (TEY)||3.51||3.57|
Treasury Yield Curve – 8/8/2014
S&P Sector Performance (YTD) – 8/8/2014
|August 13th||—||Retail Sales (July)|
|August 14th||—||Jobless Claims (week ending August 9)|
|August 15th||—||Producer Price Index (July)
Industrial Production (July)
|August 19th||—||Consumer Price Index (July)
Building Permits, Housing Starts (July)
|August 20th||—||FOMC Minutes (July 29-30)|
|August 21st||—||Existing Home Sales|
|September 1st||—||Labor Day (markets closed)|
|September 5th||—||Employment Report (August)|
|September 17th||—||FOMC Policy Decision, Yellen Press Conference|
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 August 7th, 2014.