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Clarksville, TN – The economic data were mixed, but the February Employment Report was stronger than expected. Nonfarm payrolls rose by 295,000 (±105,000), with a revision to January of -18,000. The BLS indicated that the payroll survey missed most of the bad weather that hit last month.
The household survey showed that 328,000 could not make it to work due to bad weather, which is about average (it was 601,000 in February 2014). Average weekly hours held steady (no weather impact).Average hourly earnings edged up 0.1% (+2.0% y/y) – still at a low trend (note that the Consumer Price Index fell 0.1% over the 12 months ending in January, so purchasing power is up sharply).
The unemployment rate fell to 5.5% (vs. 5.7%), due partly to a decrease in labor force participation. The employment/population ratio held steady at 59.3% (vs. 58.8% a year ago).
Market participants viewed the jobs report as likely to pull forward the date of the Fed’s liftoff on short-term interest rates (June, rather than September). Stocks stumbled, bond yields rose, and the dollar strengthened further.
Next week, the economic calendar thins out. The focus is expected to be on Thursday’s retail sales figures. However, February is a transition month for most retailers, falling between the January clearance sales and Easter shopping.
Gasoline prices rebounded last month (still down substantially in recent months), which will add to the retail sales total. Investors are likely to look ahead to the upcoming Fed policy meeting.
Consumer Money Rates
Treasury Yield Curve – 03/06/2015
S&P Sector Performance (YTD) – 03/06/2015
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 March 5th, 2015.
Frazier Allen, WMS, CRPS, Financial Advisor with F&M Bank
Web Site: http://www.raymondjames.com/frazierallen
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