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Clarksville Weekly Market Snapshot from Frazier Allen for the week of March 22nd, 2015

 

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – As was widely anticipated, the Federal Open Market Committee removed the “patient” language from the policy statement, but indicated that “an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting.”

The FOMC noted that “economic growth has moderated somewhat” (vs. January’s “expanding at a solid pace”). In its Summary of Economic Projections, Fed officials lowered their forecasts for GDP growth and inflation. The dots in the dot plot (expectations of the appropriate year-end level of the federal funds rate) generally moved lower, implying a lower expected path of short-term interest rates in the months ahead.

Frazier Allen

Frazier Allen

In her post-meeting press conference, Fed Chair Janet Yellen indicated that the FOMC will begin to consider rate increases on a meeting-by-meeting basis beginning in June, but that does not mean that it will move at the time. Future policy decisions will be data-dependent.

She repeated that the Fed wants to see further improvement in the job market and be “reasonably confident” that inflation will move back toward the 2% target. She could not give a definition of “reasonably confident”, but said that the Fed will be watching job market conditions, wages, and inflation expectations.

The Financial Times described the Fed policy meeting result as “moonwalking” – appearing to move toward tightening, but actually expecting a much less aggressive path on short-term interest rates. The stock market rallied on the Fed news, but that merely fit into the pattern of large day-to-day swings in the major stock market averages. Bond yields dropped and the dollar gave back some ground.

Next week, Greece is still ticking and may blow up soon. The economic data releases could contain a surprise or two. The Consumer Price Index is expected to reflect a rebound in gasoline prices, but core inflation should remain low. Note that the week will be bookended by two important Fed speeches.

Vice Chair Stanley Fischer, who taught former Fed Chair Ben Bernanke, current European Central Bank President Mario Draghi, and former Treasury Secretary Larry Summers, will speak Monday. Yellen speaks at the end of the week (the last 15 minutes of stock trading). Both will talk about monetary policy.

Indices

Last Last Week YTD return %
DJIA 17959.03 17895.22 0.76%
NASDAQ 4992.38 4893.29 5.41%
S&P 500 2089.27 2065.95 1.48%
MSCI EAFE 1851.01 1821.87 4.29%
Russell 2000 1236.64 1236.64 4.16%

 

Consumer Money Rates

Last 1 year ago
Prime Rate 3.25 3.25
Fed Funds 0.12 0.07
30-year mortgage 3.75 4.32

 

Currencies

Last 1 year ago
Dollars per British Pound 1.490 1.664
Dollars per Euro 1.069 1.393
Japanese Yen per Dollar 120.610 101.550
Canadian Dollars per Dollar 1.266 1.118
Mexican Peso per Dollar 15.199 13.167

 

Commodities

Last 1 year ago
Crude Oil 43.96 100.37
Gold 1164.75 1347.31

 

Bond Rates

Last 1 month ago
2-year treasury 0.58 0.66
10-year treasury 1.94 2.11
10-year municipal (TEY) 3.20 2.80

 

Treasury Yield Curve – 03/20/2015

Treasury Yield Curve – 03/20/2015

S&P Sector Performance (YTD) – 03/20/2015

S&P Sector Performance (YTD) – 03/20/2015

 

Economic Calendar

March 23rd Existing Home Sales (February)
Fed Vice Chair Fischer Speaks (monetary policy)
March 24th Consumer Price Index (February)
New Home Sales (February)
March 25th Durable Goods Orders (February)
March 26th Initial Claims (week ending March 21st)
March 27th Real GDP (4Q14, 3rd estimate)
Fed Chair Yellen Speaks (monetary policy)
April 1st ISM Manufacturing Index (March)
April 3rd Good Friday Holiday (stock market closed)
Employment Report (March)
NCAA Final Four

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 March 19th, 2015.

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


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