Clarksville Weekly Market Snapshot from Frazier Allen for the week of May 22nd, 2016

Clarksville, TN – The FOMC minutes from the April 26th-27th policy meeting showed that “most [meeting] participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee’s 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June.”

However, “participants expressed a range of views about the likelihood that incoming information would make it appropriate to adjust the stance of policy at the time of the next meeting.”

In other words, a majority of Fed officials believe that a June rate hike would be appropriate under certain conditions, but officials differed in their views of whether those conditions would be met. The minutes served to jolt the financial markets out of their complacency, which held that the Fed might not raise rates at all this year.

As expected, the economic data reports remained consistent with a pickup in economic growth in 2Q16. Some of that likely reflects seasonal adjustment issues related to the early Easter. The Consumer Price Index reflected higher gasoline prices in April, while core inflation remained low.

Industrial production figures reflected a return to more normal temperatures (higher output of utilities) and a rebound in auto production. Ex autos, manufacturing output appears to be trending about flat (mixed across industries).

Next week, the economic calendar thins out somewhat, with a number of second-tier reports for April. The focus may be on the GDP figure, which is expected to be revised higher (+0.5% in the advance estimate).

Important Disclosures

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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 May 19th, 2016.

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