Clarksville, TN – Investors remained concerned about the global economy. The Swiss National Bank abandoned its currency ceiling against the euro, generating turmoil in the foreign exchange markets and adding to investor anxiety in the U.S.
While the Swiss franc surged, the U.S. dollar gained further ground against other currencies and a flight to safety pushed yields on long-term Treasuries lower (the 30-year bond yield to an all-time low). The SNB’s move reflected the central bank’s inability to defend the ceiling (especially with the European Central Bank expected to embark on QE next week), but investors took it as a sign of global financial instability.Retail sales fell unexpectedly in December. However, seasonal adjustment is difficult and it was still a strong quarter. Warmer temperatures reduced the output of utilities, restraining the headline industrial production figure for December.
Manufacturing was mixed, but moderate. Oil and gas drilling activity declined, but energy extraction jumped (likely to help make up for the drop in prices).
The CPI fell 0.4% in December, up just 0.8% in 2014 (vs. +1.5% in 2013). Ex-food & energy, the CPI was flat, +1.6% y/y (vs. +1.7% in 2013). Consumer sentiment continued to rise.
Next week, the focus will be on the European Central Bank’s policy meeting, where officials are expected to vote (not unanimously) for quantitative easing. While widely anticipated, there are a number of questions to be answered if QE is approved (how large and for how long?). U.S. economic data should be unimportant (it’s hard to get excited about December housing activity – the bigger test will come in the spring).
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.520||1.643|
|Dollars per Euro||1.169||1.362|
|Japanese Yen per Dollar||116.780||104.340|
|Canadian Dollars per Dollar||1.197||1.097|
|Mexican Peso per Dollar||14.558||13.129|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||2.81||3.22|
Treasury Yield Curve – 01/16/2015
S&P Sector Performance (YTD) – 01/16/2015
|January 19th||—||MLK, Jr. Holiday (markets closed)|
|January 20th||—||Homebuilder Sentiment (January)
State of the Union Address
|January 21st||—||Building Permits, Housing Starts (December)|
|January 22nd||—||ECB Policy Decision and Mario Draghi Press Conference
Jobless Claims (week ending January 17)
|January 23rd||—||Existing Home Sales (December)
Leading Economic Indicators (December)
|January 27th||—||Durable Goods Orders (December)
Consumer Confidence (January)
|January 28th||—||FOMC Policy Decision (no 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 January 15th, 2015.