Clarksville Weekly Market Snapshot from Frazier Allen for the week of November 1st, 2015

Clarksville, TN – The Federal Open Market Committee left short-term interest rates unchanged, but the tone of the policy statement was unexpectedly hawkish. The FOMC removed the phrase about downside risks from the global economy, but said that it would monitor global economic and financial developments.

It also specifically talked about the decision framework for “the next meeting,” clearly putting a December 16th rate hike back in play.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of October 28th, 2015

Clarksville, TN – The economic calendar was light. Residential construction figures were mixed, largely reflecting the usual noise in the multi-family sector data (single-family starts and permits were little changed and still up strongly from a year ago). Existing home sales rebounded from a surprise drop in August. The four-week average for jobless claims fell to the lowest level since 1973.

Earnings reports were mixed, but investors appeared to be encouraged by the view that economic growth will continue, but not so fast that the Federal Reserve rushes to take away the punch bowl.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of October 4th, 2015

Clarksville, TN – The economic data were mixed, but consistent with the theme of global softness and domestic strength. Unit auto sales improved further in September – and, combined with the August data on personal income and spending, suggest that inflation-adjusted consumer spending (70% of GDP) is on track to have expanded at an annual pace of 3.5% to 4.0% in 3Q15.

The trade deficit in goods widened sharply in August, with that split evenly between stronger imports (despite lower oil prices) and weaker exports. Net exports and an inventory correction are expected to subtract significantly from 3Q15 GDP growth, but underlying domestic demand appears to have remained strong.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of September 27th, 2015

Clarksville, TN – In Janet Yellen’s first public speech after the recent FOMC meeting, the Fed chair downplayed concerns about the rest of the world and placed herself among the majority of Fed officials expecting to raise short-term interest rates by the end of the year. In a scary moment for investors, Yellen struggled to finish her speech.

She repeatedly lost her place, paused for long periods, and looked generally unwell. She received medical treatment. A Fed spokesperson said that she was dehydrated and that she felt fine later. While stock market participants have been worried about Fed tightening, they seemed to have been more encouraged by Yellen’s expressed confidence in the U.S. economy.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of September 20th, 2015

Clarksville, TN – The Federal Open Market Committee delayed the start of policy normalization, citing concerns about global economic and financial developments.

The FOMC is not reacting to overseas developments per se, but rather to the implications for the U.S. economy (some restraint on growth, further downward pressure on inflation). In the revised dot plot, there was little agreement about where the federal funds rate would be at the end of 2016 and 2017.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of September 15th, 2015

Clarksville, TN – The economic calendar was thin, leaving investors free to worry about slower global growth and Federal Reserve policy. The stock market was volatile, but not as much as in recent weeks.

The Bank of Canada and the Bank of England each left short-term interest rates unchanged. The BOC lowered rates in January and July, but showed no bias to cut rates further in the next few months. The BOE has been debating whether to start raising rates, but appears to have put such notions aside in the near term, reflecting concerns about the global economy.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of September 6th, 2015

Clarksville, TN – The economic data were mixed, but generally consistent with moderately strong growth. Unit auto sales improved in August. The ISM Manufacturing Index slowed. The Non-Manufacturing Index pulled back a bit after surging in July (still strong). The Fed’s Beige Book described growth as evenly split between “modest” and “moderate” across the 12 Fed districts.

The August employment report was mixed, but generally strong. Nonfarm payrolls rose by 173,000 (median forecast: +220,000), but with a net revision of +44,000 to June and July.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of August 30th, 2015

Clarksville, TN – A sharp drop in China’s stock market rattled investors’ nerves around the world. The Dow Jones Industrial Average fell by more than 1,000 points at the open on Monday, regrouped, and then fell again, leaving the benchmark index down 588.

Volatility continued throughout the week, but investors were encouraged by China’s efforts to shore up its stock market and support economic growth. Oil prices fell further, but picked up by the end of the week. The market volatility has left investors struggling to figure out where share prices should be. Volatility is expected to decrease in coming days, but may continue for a while.

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of August 16th, 2015

Clarksville, TN – China’s leadership wants the yuan to become an important reserve currency, but that means that the country would have to let the currency float freely and be set by market forces. The People’s Bank of China, the country’s central bank, decided to alter its exchange rate regime.

The currency is allowed to trade in a 2% band around a level announced before the markets open. The PBOC said that this base level would simply be set at the previous session’s close (rather than taken out of the air).

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Clarksville Weekly Market Snapshot from Frazier Allen for the week of August 9th, 2015

Clarksville, TN – The economic data were mixed, but generally consistent with moderately strong growth. The ISM surveys went in opposite directions – the manufacturing index was softer than anticipated, while the non-manufacturing index exceeded expectations. Unit auto sales rebounded. The July Employment Report was about as expected.

Nonfarm payrolls rose by 215,000, with a net upward revision to May and June of +14,000. That put the three-month average at 235,000 (a 2.82 million annual rate). The unemployment rate held steady at 5.3%.

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