Equipping you
as an informed investor

Weekly Market Snapshot
March 5, 2021

Market Commentary
by Scott J. Brown, Ph.D., Chief Economist

In an online discussion, Fed Chair Powell repeated that the central bank is a long way from achieving its inflation and employment goals (implying no change in short-term rates or the money pace of asset purchases anytime soon). Asked about the recent rise in bond yields, Powell said, “I don’t want to be the judge of a particular level of long-term interest rates,” but he added that he “would be concerned by disorderly conditions in markets or a persistent tightening in financial conditions broadly that threatens the achievement of our goals.”

Nonfarm payrolls rose more than expected in February (+379,000 overall, +465,000 private), despite the impact of poor weather. However, we are about 9.5 million jobs below where we were a year ago, and we would have added up to two million more jobs if not for the pandemic, leaving us a very long way from full employment. The unemployment rate edged down to 6.2%, but the broader U-6 measure remained at 11.1%.

Next week, Fed officials are in the quiet period ahead of next week’s Federal Open Market Committee meeting, but inflation concerns are likely to remain an issue for financial market participants. The Consumer Price Index is expected to reflect higher gasoline prices in February, but core inflation is likely to remain low, due largely to modest gains in homeowners’ equivalent rent. Pipeline inflation pressures should be more evident in the PPI, but it takes a very large increase in commodity prices to have even a small impact on inflation at the consumer level.


Indices

  Last Last Week YTD return %
DJIA 30924.14 31402.01 1.04%
NASDAQ 12723.47 13119.43 -1.28%
S&P 500 3768.47 3829.24 0.33%
MSCI EAFE 2233.61 2233.61 4.01%
Russell 2000 2146.92 2200.17 8.71%

Consumer Money Rates

  Last 1 year ago
Prime Rate 3.25 4.75
Fed Funds 0.08 1.58
30-year mortgage 3.22 3.15

Currencies

  Last 1 year ago
Dollars per British Pound 1.3895 1.295
Dollars per Euro 1.1969 1.124
Japanese Yen per Dollar 107.98 106.16
Canadian Dollars per Dollar 1.267 1.341
Mexican Peso per Dollar 21.126 19.846

Commodities

  Last 1 year ago
Crude Oil 63.53 45.90
Gold 1700.70 1668.00

Bond Rates

  Last 1 month ago
2-year treasury 0.14 0.11
10-year treasury 1.57 1.15
10-year municipal (TEY) 1.58 1.09

Treasury Yield Curve – 03/05/2021

Chart

As of close of business 03/04/2021


S&P Sector Performance (YTD) – 03/05/2021


Chart

As of close of business 03/04/2021


Economic Calendar

March 10  —  Consumer Price Index (February)
March 11  —  Jobless Claims (week ending March 6)
March 12  —  Producer Price Index (February)
 —  UM Consumer Sentiment (mid-March)
March 16  —  Import Prices (February)
 —  Retail Sales (February)
 —  Industrial Production (February)
 —  Homebuilder Sentiment (March)
March 17  —  Building Permits, Housing Starts (February)
 —  FOMC Policy Decision
 —  Fed Summary of Economic Projections
 —  Powell Press Conference
April 2  —  Good Friday Holiday (stock market closed, half day for bonds)
 —  Employment Report (March)
April 28  —  FOMC Policy Decision

 

All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and 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. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.

The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor's returns. U.S. 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. U.S. 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 U.S. 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. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business March 4, 2021 .

“Who do I turn to for financial guidance?”

This is the question to which this hardworking couple in their mid-60s – and on the verge of retirement – sought an answer. Jim and Amanda had each saved diligently over the years in their company 401(k)s and, together, had amassed a large retirement nest egg. Now that they were considering retirement they realized there were many important questions to which they didn’t have answers. They also wanted professional help in creating a clear road map for their financial lives – both now and into their retirement years. And with so many choices for financial advice – from stockbrokers to CPAs – they didn’t know where to turn or to whom. Fortunately, the couple learned about Lynn and our firm and became interested particularly in Lynn’s designation as a CERTIFIED FINANCIAL PLANNER™ professional.

Soon, Jim and Amanda made an appointment and came in to talk with Lynn. They immediately discovered that she really listened to them and they learned about her knowledge of complex employee retirement savings plans, including the special circumstances surrounding things like employer stock, making the choice of taking a pension in either monthly payments or a lump-sum, and the tax issues of retirement savings.

With Lynn’s help, Jim and Amanda mapped out a plan for retirement that is part of a complete financial plan that can be adjusted as things change in Jim and Amanda’s life. But as for today, accounts are in order. Dates have been set. And most important, the couple now has a more confident outlook for the future.

What’s your question?

This case study is for illustrative purposes only. Individual cases will vary. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Prior to making any investment decision, you should consult with your financial advisor about your individual situation.