March 5th, 2010
Market Commentary
by Scott J. Brown, Ph.D., Chief Economist
The economic data were mixed, consistent with a gradual economic recovery. The February Employment Report was not as bad as feared. Nonfarm payrolls fell by 36,000, reflecting the impact of poor weather. The unemployment rate held steady at 9.7%, even as labor force participation edged higher. Average weekly hours ticked down (a function of the weather). Average weekly hours rose 0.1%, up 1.9% year-over-year. The Bureau of Labor Statistics said it was impossible to estimate the precise impact of the weather.
The weather had an effect on other data in February. Motor vehicle sales disappointed. The Institute for Supply Management (ISM) surveys were mixed, with more moderate growth in manufacturing and weak but somewhat better growth in non-manufacturing industries. The Federal Reserve’s Beige Book noted that “economic conditions continued to expand since the last report, although severe snowstorms in early February held back activity in several districts.” Nine of the 12 Fed regions saw improved economic activity, but “in most cases the increases were modest.”
Next week, the economic calendar thins out. The retail sales report will be the obvious highlight – auto sales rolled back, but chain-store sales results exceeded expectations. Treasury supply may be a concern, but the bond market has had little problem absorbing the government’s borrowing in recent months.
Indices
| |
Last |
Last Week |
YTD return % |
| DJIA |
10444.14 |
10321.03 |
0.15% |
| NASDAQ |
2292.31 |
2234.22 |
1.02% |
| S&P 500 |
1122.97 |
1102.94 |
0.71% |
| MSCI EAFE |
1527.84 |
1473.84 |
-3.35% |
| Russell 2000 |
652.47 |
630.46 |
4.33% |
Consumer Money Rates
| |
Last |
1-year ago |
| Prime Rate |
3.25 |
3.25 |
| Fed Funds |
0.25 |
0.25 |
| 30-year mortgage |
5.01 |
5.24 |
Currencies
| |
Last |
1-year ago |
| Dollars per British Pound |
1.504 |
1.413 |
| Dollars per Euro |
1.358 |
1.261 |
| Japanese Yen per Dollar |
88.110 |
99.240 |
| Canadian Dollars per Dollar |
1.031 |
1.280 |
| Mexican Peso per Dollar |
12.709 |
15.213 |
Commodities
| |
Last |
1-year ago |
| Crude Oil |
80.21 |
45.38 |
| Gold |
1134.25 |
907.20 |
Bond Rates
| |
Last |
1-month ago |
| 2-year treasury |
0.91 |
0.78 |
| 10-year treasury |
3.67 |
3.60 |
| 10-year municipal (TEY) |
4.62 |
4.94 |
Treasury Yield Curve – 3/5/2010
S&P Sector Performance Charts – 3/5/2010
Economic Calendar
| March 9 |
— |
Treasury Note Auction (3-year notes)
|
| March 10 |
— |
Wholesale Inventories (January)
Treasury Note Auction (reopened 10-year notes)
|
| March 11 |
— |
Trade Balance (January)
Treasury Bond Auction (reopened 30-year bonds)
|
| March 12 |
— |
Retail Sales (February)
Consumer Sentiment (mid-March)
|
| March 15 |
— |
Industrial Production (February)
|
| March 16 |
— |
Residential Construction (February)
FOMC Meeting
|
| March 17 |
— |
Producer Price Index (February) |
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. Municipal bond interest is not subject to federal income tax but may be subject to AMT, state or local taxes. 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.
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 March 4th, 2010.
