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Clarksville Weekly Market Snapshot from Frazier Allen for the week of September 14th, 2014

 

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – The economic data calendar was thin. Retail sales rose as expected in August. However, the figures for June and July were revised higher.

While the pace of consumer spending growth does not appear to be especially strong into 3Q14, it’s not terrible weak either (and certainly not as bad as the data suggested a month ago). Financial market participants didn’t seem to care much about the retail sales data.

Global anxieties receded a bit as the “no” vote for Scottish independence regained an upper hand in the polls. The markets didn’t react much to President Obama’s call for military action in the Middle East.

Frazier Allen

Frazier Allen

Next week, the focus will be on the Fed. Policymakers are expected to reduce the monthly pace of asset purchases by another $10 billion, on track to finish the program at the end of October.

The bigger question is whether the Fed will alter its forward guidance on short-term interest rates.

In the last four Fed policy statements, officials have indicated that the federal funds rate target is expected to remain “exceptionally low” for “a considerable time” after the asset purchase program (QE3) ends. The Fed’s inflation hawks want to change that, but that’s a minority opinion among policy voters.

Note that Fed officials (the five Fed governors and the 12 district bank presidents) will submit revised projections for growth, unemployment, and inflation (extending those out to 2017). They’ll also forecast the Fed funds target for the end of the next few years. In June, these forecasts showed all but one fed official expecting to keep short-term interest rates steady through the end of this year, while all but three expected to begin raising rates sometime in 2015.

Forecasts for the federal funds rate at the end of 2015 (and implicitly the expected start date of Fed rate hikes) were all over the place. It will be interesting to see whether these forecasts begin to bunch up around specific levels. The bottom line should remain the same – that is, monetary policy in 2015 will depend on the evolution of the economy in the second half of 2014.

Indices

Last Last Week YTD return %
DJIA 17049.00 17069.58 2.85%
NASDAQ 4591.81 4562.29 9.94%
S&P 500 1997.45 1997.65 8.07%
MSCI EAFE 1903.85 1932.53 -0.61%
Russell 2000 1172.34 1167.21 0.75%

 

Consumer Money Rates

Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.09 0.05
30-year mortgage 4.12 4.57

 

Currencies

Last 1-year ago
Dollars per British Pound 1.624 1.577
Dollars per Euro 1.292 1.326
Japanese Yen per Dollar 107.120 100.290
Canadian Dollars per Dollar 1.101 1.034
Mexican Peso per Dollar 13.228 13.058

 

Commodities

Last 1-year ago
Crude Oil 92.83 107.56
Gold 1240.91 1359.94

 

Bond Rates

Last 1-month ago
2-year treasury 0.57 0.42
10-year treasury 2.60 2.39
10-year municipal (TEY) 3.48 3.49

 

Treasury Yield Curve – 9/12/2014

Treasury Yield Curve – 9/12/2014

 

S&P Sector Performance (YTD) – 9/12/2014

S&P Sector Performance (YTD) – 9/12/2014

 

Economic Calendar

September 15th Empire State Manufacturing Ibdex (September)
Industrial Production (August)
September 16th Producer Price Index (August)
September 17th Consumer Price Index (August)
Homebuilder Sentiment (September)
FOMC Policy Decision, Yellen Press Conference
September 18th Scottish Independence Referendum
Jobless Claims (week ending September 13th)
Building Permits, Housing Starts (August)
Philadelphia Fed Index (September)
September 19th Leading Economic Indicators (August)
October 3rd Employment Report (September)

Indices

Last Last Week YTD return %
DJIA 17069.58 17079.57 2.97%
NASDAQ 4562.29 4557.70 9.23%
S&P 500 1997.65 1996.74 8.08%
MSCI EAFE 1932.53 1922.86 0.88%
Russell 2000 1167.21 1165.95 0.31%

 

Consumer Money Rates

Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.09 0.03
30-year mortgage 4.10 4.57

Currencies

Last 1-year ago
Dollars per British Pound 1.645 1.561
Dollars per Euro 1.313 1.318
Japanese Yen per Dollar 104.970 99.450
Canadian Dollars per Dollar 1.089 1.049
Mexican Peso per Dollar 13.083 13.328

 

Commodities

Last 1-year ago
Crude Oil 94.45 107.23
Gold 1271.32 1402.95

 

Bond Rates

Last 1-month ago
2-year treasury 0.50 0.42
10-year treasury 2.43 2.39
10-year municipal (TEY) 3.31 3.52

 

Treasury Yield Curve – 9/5/2014

Treasury Yield Curve – 9/5/2014

 

S&P Sector Performance (YTD) – 9/05/2014

S&P Sector Performance (YTD) – 9/05/2014

 

Economic Calendar

September 9th Small Business Optimism Index (August)
September 11th Jobless Claims (week ending September 6)
September 12th Retail Sales (August)
September 17th FOMC Policy Decision, Yellen Press Conference
September 18th Scottish Independence Referendum
October 3rd Employment Report (September)

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 September 11th, 2014.

©2014 Raymond James Financial Services, Inc. member FINRA / SIPC.


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