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Clarksville Weekly Market Snapshot from Frazier Allen for the week of July 6th, 2016

F&M Investment Services - Raymond James - Clarksville, TNClarksville, TN – Despite there being no plan for Brexit and expectations of a lengthy and uncertain process of disentanglement from the European Union, stock market fear subsided.

The impact on the U.S. economy of a weaker U.K. is expected to be small, and in some ways may even be positive (lower mortgage rates and greater capital flows to the U.S.). Long-term interest rates remain low.

Bank of England Governor Carney helped things along by suggesting that a rate cut would likely be warranted this summer (the BoE’s Monetary Policy Committee will meet on July 14th).

Frazier Allen
Frazier Allen

The economic data were mostly strong. The Conference Board’s Consumer Confidence Index picked up. The June ISM manufacturing data were stronger than expected (although moderate).

Real GDP rose at a 1.1% annual rate in the 3rd estimate of 1Q16 GDP growth, as anticipated, but the mix was unexpected (consumer spending was revised lower, exports flipped from a moderate negative to a small positive, and business fixed investment fell less steeply).

The markets rarely give much attention to the personal income and spending data, but the May figures showed that inflation-adjusted consumer spending (70% of GDP) is on track for an annual rate of 4.0-4.5% in 2Q16 (vs. +1.5% in 1Q16). One important caveat: annual benchmark revisions to these data are due on July 29th.

Next week, the focus will be on the July Employment Report. Payrolls were surprisingly soft in May (with a downward revision to March and April), even accounting for 35,000 striking Verizon workers. Those strikers will return in the June payroll data.

Why has job growth slowed into 2Q16? Mild weather may have pulled forward seasonal job gains into earlier months. It could be statistical noise or problems with seasonal adjustment. Firms may have slowed their hiring (job destruction still appears to be low), or firms may be having a tougher time finding qualified workers as the job market tightens. Or it could be a combination of all of these.

Hopefully, the June job market data will help to answer the question, but we ought to see a moderate pace of payroll growth in June. Still, seasonal adjustment (the end of the school year) may add some noise. Whatever the case, financial market participants will look to the payroll figure to help set expectations for the economy and monetary policy.


Last Last Week YTD return %
DJIA 17929.99 18011.07 2.90%
NASDAQ 4842.67 4910.04 -3.29%
S&P 500 2098.86 2113.32 2.69%
MSCI EAFE 1608.45 1687.04 -6.28%
Russell 2000 1151.92 1172.22 1.41%


Consumer Money Rates

Last 1 year ago
Prime Rate 3.50 3.25
Fed Funds 0.41 0.13
30-year mortgage 3.42 4.08



Last 1 year ago
Dollars per British Pound 1.331 1.562
Dollars per Euro 1.111 1.153
Japanese Yen per Dollar 103.20 123.17
Canadian Dollars per Dollar 1.292 1.259
Mexican Peso per Dollar 18.280 15.778



Last 1 year ago
Crude Oil 48.33 56.96
Gold 1320.60 1169.30


Bond Rates

Last 1 month ago
2-year treasury 0.56 0.88
10-year treasury 1.43 1.79
10-year municipal (TEY) 2.09 2.51


Treasury Yield Curve – 07/01/2016

As of close of business 06/30/2016

Treasury Yield Curve – 07/01/2016


S&P Sector Performance (YTD) – 07/01/2016

As of close of business 06/30/2016

S&P Sector Performance (YTD) – 07/01/2016


Economic Calendar

July 4 Independence Day Holiday (markets closed)
July 6 ISM Non-Manufacturing Index (June)
FOMC Minutes (June 14-15)
July 7 ADP Payroll Estimate (June)
Jobless Claims (week ending July 2)
July 8 Employment Report (June)
July 13 Fed Beige Book
July 14 BOE Policy Decision

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 30th, 2016.

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


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