TBT Financial ServicesAn Independent Firm

Weekly Market Snapshot

August 22, 2014

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

Market participants had expected Fed Chair Janet Yellen to adopt a decidedly "dovish" tone in her Jackson Hole speech. However, Yellen presented a balanced assessment of the evidence and theories of labor market slack. While Yellen still sees plenty of labor market slack currently, she left the monetary policy outlook as an open question. She repeated the notion (also included in the FOMC minutes) that the Fed could firm monetary policy sooner if the economy strengthens more than anticipated, but could also tighten more slowly if the economy disappoints.

The economic data reports were generally strong. Residential construction figures were a lot stronger than anticipated, reflecting the usual volatility in the multi-family sector and the large uncertainty in how the housing start figures are calculated. Single-family permits, the key figure in the report, rose 0.9%, with mixed results across regions. The Consumer Price Index rose a little less than expected in July. Existing home sales rose a little more than expected.

Next week, the march of economic data releases continues. New home sales and durable goods orders are notoriously volatile from month to month, with some potential to surprise. The estimate of 2Q14 GDP growth is likely to be revised a bit higher. July personal income and spending figures will help fill in the GDP picture for 3Q14, although many investors are likely to check out early ahead of the three-day weekend.


  Last Last Week YTD return %
DJIA 17039.49 16713.58 2.79%
NASDAQ 4532.10 4453.00 8.51%
S&P 500 1992.37 1955.18 7.79%
MSCI EAFE 1924.34 1904.90 0.46%
Russell 2000 1160.03 1143.34 -0.31%

Consumer Money Rates

  Last 1-year ago
Prime Rate 3.25 3.25
Fed Funds 0.08 0.10
30-year mortgage 4.10 4.58


  Last 1-year ago
Dollars per British Pound 1.659 1.567
Dollars per Euro 1.326 1.339
Japanese Yen per Dollar 103.800 97.490
Canadian Dollars per Dollar 1.097 1.043
Mexican Peso per Dollar 13.111 13.065


  Last 1-year ago
Crude Oil 96.31 103.81
Gold 1281.31 1365.06

Bond Rates

  Last 1-month ago
2-year treasury 0.47 0.49
10-year treasury 2.40 2.48
10-year municipal (TEY) 3.40 3.57

Treasury Yield Curve – 8/22/2014

S&P Sector Performance (YTD) – 8/22/2014

Economic Calendar

August 25  —  New Home Sales (July)
August 26  —  Durable Goods Orders (August)
Case-Shiller Home Price Index (June)
Consumer Price Index (July)
August 28  —  Jobless Claims (week ending August 23)
Real GDP (2Q14, 2nd estimate)
Pending Home Sales Index (July)
August 29  —  Personal Income and Spending (July)
Chicago Purchasing Managers Index (August)
Consumer Sentiment (August)
September 1  —  Labor Day (markets closed)
September 5  —  Employment Report (August)
September 17  —  FOMC Policy Decision, Yellen Press Conference

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. 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. Also municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. 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) assumes a 35% tax rate. Municipal securities may lose their tax-exempt status if certain legal requirements are not met, or if tax laws change.

Material prepared by Raymond James for use by its financial advisors.

Data source: Bloomberg, as of close of business August 21, 2014.

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