Weekly Market Snapshot from Frazier Allen for the week of February 10th, 2013
Market Commentary by Scott J. Brown, Ph.D., Chief Economist
Federal Reserve Governor Jeremy Stein fell short of declaring that credit markets are overheating, but suggested that an extended period of low interest rates could lead to the taking on of greater duration of credit risks, or to employment of greater leverage in a “reach for yield.” He said that the Fed must monitor the financial markets closely and could address signs of excessive risk-taking through regulatory efforts or through monetary policy.
Next week, President Barack Obama will deliver his State of the Union Address on Tuesday evening (which is also Mardi Gras). Most likely, the President will ask that Congress postpone the sequester through the end of the year. Note that it’s not costless to do so – there has to be an offsetting increase in revenues (possibly closed loopholes) or reduction in other types of spending (say, reduced farm subsidies). The reports on retail sales and industrial production have some market-moving potential, but seasonal adjustment could exaggerate what would otherwise be minor shifts in the data.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.570||1.590|
|Dollars per Euro||1.340||1.326|
|Japanese Yen per Dollar||93.490||76.870|
|Canadian Dollars per Dollar||0.999/td>||0.995|
|Mexican Peso per Dollar||12.711||12.629|
|10-year municipal (TEY)||3.09||3.05|
Treasury Yield Curve – 02/08/2013
S&P Sector Performance (YTD) – 02/08/2013
|State of the Union Address|
|Import Prices (January)
Retail Sales (January)
|Jobless Claims (week ending February 9th)
Retail Sales (January)
|Industrial Production (January)|
|Presidents Day Holiday (markets closed)|
|FOMC minutes (January 29th-30th)|
|Real GDP (4Q12, 2nd estimate)|
|Employment Report (February)|
|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 February 7th, 2013.