The Weekly Market Snapshot from Frazier Allen for the week of January 20th, 2013
Market Commentary by Scott J. Brown, Ph.D., Chief Economist
The economic data were mixed, but generally consistent with moderate growth in the near term. Retail sales and industrial production were largely in line with expectations. Jobless claims sank and housing starts jumped, boosting the major stock market indices, although seasonal adjustment likely played a part. The Fed’s two major regional surveys disappointed, reflecting contractions in new orders and employment and some pickup in input price pressures.
Earnings reports were mixed, but investors seemed more concerned with the path ahead.There will be three major hurdles in Washington over the next few weeks. 1) The drop dead date for the debt ceiling is expected between February 15th and March 1st. 2) Large spending cuts are set to begin on March 1st (but the sequester could be delayed again). 3) The Continuing Resolution that authorizes government spending expires on March 27th (most likely, we’ll simply see another CR, but there may be some noise and uncertainty).
Next week, the economic data calendar is relatively light. Home sales figures could be exaggerated by the seasonal adjustment. Annual benchmark revisions will be incorporated into the Index of Leading Economic Indicators, but the recent story is not expected to change much (and the drop jobless claims will make a significant positive contribution in the December calculation). Earnings should remain a factor for equities.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.599||1.535|
|Dollars per Euro||1.336||1.273|
|Japanese Yen per Dollar||89.710||76.840|
|Canadian Dollars per Dollar||0.985||1.014|
|Mexican Peso per Dollar||12.567||13.459|
|10-year municipal (TEY)||2.57||2.66|
Treasury Yield Curve – 01/18/2013
S&P Sector Performance (YTD) – 01/18/2013
|MLK, Jr. Holiday (markets closed)|
|Existing Home Sales (December)|
|Jobless Claims (week ending January 19th)
Leading Economic Indicators (December)
|New Home Sales (December)|
|Durable Goods Orders (December)|
|Consumer Confidence (January)|
|Real GDP (1Q13, advance estimate)
FOMC Policy Decision (no Bernanke press briefing)
|Employment Report (January)|
|Super Bowl XLVII|
|Presidents Day Holiday (markets closed)|
|FOMC Policy Decision, Bernanke Press Briefing|
[320left]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.
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 17th, 2013.