Clarksville, TN – Market participants had expected Fed Chair Janet Yellen to adopt a decidedly “dovish” tone in her Jackson Hole speech.
However, Yellen presented a balanced assessment of the evidence and theories of labor market slack. While Yellen still sees plenty of labor market slack currently, she left the monetary policy outlook as an open question.
She repeated the notion (also included in the FOMC minutes) that the Fed could firm monetary policy sooner if the economy strengthens more than anticipated, but could also tighten more slowly if the economy disappoints.The economic data reports were generally strong. Residential construction figures were a lot stronger than anticipated, reflecting the usual volatility in the multi-family sector and the large uncertainty in how the housing start figures are calculated.
Single-family permits, the key figure in the report, rose 0.9%, with mixed results across regions. The Consumer Price Index rose a little less than expected in July. Existing home sales rose a little more than expected.
Next week, the march of economic data releases continues. New home sales and durable goods orders are notoriously volatile from month to month, with some potential to surprise. The estimate of 2Q14 GDP growth is likely to be revised a bit higher.
July personal income and spending figures will help fill in the GDP picture for 3Q14, although many investors are likely to check out early ahead of the three-day weekend.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.659||1.567|
|Dollars per Euro||1.326||1.339|
|Japanese Yen per Dollar||103.800||97.490|
|Canadian Dollars per Dollar||1.097||1.043|
|Mexican Peso per Dollar||13.111||13.065|
|10-year municipal (TEY)||3.40||3.57|
Treasury Yield Curve – 8/22/2014
S&P Sector Performance (YTD) – 8/22/2014
|August 25th||—||New Home Sales (July)|
|August 26th||—||Durable Goods Orders (August)
Case-Shiller Home Price Index (June)
Consumer Price Index (July)
|August 28th||—||Jobless Claims (week ending August 23rd)
Real GDP (2Q14, 2nd estimate)
Pending Home Sales Index (July)
|August 29th||—||Personal Income and Spending (July)
Chicago Purchasing Managers Index (August)
Consumer Sentiment (August)
|September 1st||—||Labor Day (markets closed)|
|September 5th||—||Employment Report (August)|
|September 17th||—||FOMC Policy Decision, Yellen Press Conference|
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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 21st, 2014.