The Weekly Market Snapshot from Frazier Allen for the week of May 20th, 2012
Market Commentary by Scott J. Brown, Ph.D., Chief Economist
The economic data were mixed, but mostly on the soft side of expectations. Retail sales were a bit weaker than expected in April. Industrial production improved, but partly reflected a surge in the output of utilities (more normal weather). Residential construction figures showed a moderate trend of improvement (from very low levels) in single-family homebuilding.
The minutes of the April 24th-25th monetary policy meeting showed that Fed officials were worried about the downside risks to growth from Europe and the potential for significantly tighter fiscal policy in the U.S. Fed officials were open to doing more (QE3), but only if the economic recovery were to lose momentum or downside risks intensified.
Greece was unable to form a coalition to run the government and so will have another set of elections on June 17th.
Next week, the economic calendar thins out. The reports on new home sales and durable goods orders are two of the most notoriously erratic economic data releases (choppy and subject to large revisions). Hence, there’s a good chance for a surprise. Europe is expected to remain a key concern for U.S. investors. The weekend meeting of G-8 leaders should result in a strong statement of support for the euro area, but not much action. The bond market will close early on Friday, ahead of the three-day weekend. Looking ahead, the May Employment Report looms as the next major data point for the markets.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.583||1.621|
|Dollars per Euro||1.272||1.417|
|Japanese Yen per Dollar||79.380||81.360|
|Canadian Dollars per Dollar||1.017||0.976|
|Mexican Peso per Dollar||13.812||11.758|
|10-year municipal (TEY)||3.00||3.25|
Treasury Yield Curve – 5/18/2012
S&P Sector Performance (YTD) – 5/18/2012
|Existing Home Sales (April)|
|New Home Sales (April)|
|Jobless Claims (week ending May 19th)
Durable Goods Orders (April)
|Consumer Sentiment (May)|
|Memorial Day Holiday (markets closed)|
|Consumer Confidence (May)|
|Real GDP (1Q12, 2nd estimate)|
|Employment Report (May)
ISM Manufacturing Index (May)
|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 May 17th, 2012.