Clarksville Weekly Market Snapshot from Frazier Allen for the week of July 3rd, 2016

Clarksville, TN – U.S. financial markets spent most of the week pricing in a greater likelihood that the United Kingdom would vote to remain in the European Union.

Oops. The surprise “leave” victory in the U.K. referendum sent markets reeling. Global stock markets fell sharply. The pound plunged (to a 30-year low). Bond yields sank, reflecting a flight to safety.

Still, this wasn’t a Lehman-type event. Market participants were simply caught leaning the wrong way. Prime Minister Cameron resigned, effective October, leaving his predecessor a lengthy negotiation with the EU on exit terms.

The EU exit will have a negative impact on economic growth in the U.K., and there’s a good chance of a recession. However, financial markets should begin to settle down soon.

In her semiannual monetary policy testimony to Congress, Fed Chair Yellen indicated that the central bank will maintain a cautious approach to raising short-term interest rates. Yellen’s comments and the various economic reports were overshadowed by the Brexit vote.

Next week, the economic calendar is relatively quiet. First quarter growth is expected to be revised higher in the third estimate of 1Q16 GDP (note annual benchmark revisions are due, along with the advance estimate for 2Q16, on July 29). Personal income and spending figures will help fill in the consumer picture for the second quarter.

The ISM Manufacturing Index would normally get the most attention, but it shows up on Friday, when many market participants are likely to be out ahead of the three-day weekend. Markets will close early on Friday.

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 June 23rd, 2016.

©2016 Raymond James Financial Services, Inc. member FINRA / SIPC.