TBT Financial ServicesAn Independent Firm

Weekly Market Snapshot

February 27, 2015

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

Greece's reform proposals were accepted by European finance ministers, effectively kicking the can down the road for another four months.

In her monetary policy testimony, Fed Chair Janet Yellen signaled that the Fed will begin to consider raising short-term interest rates on a meeting-by-meeting basis. Before then, the Fed will change its forward guidance (currently, the language suggests that the Fed can be "patient" in deciding when to raise rates). However, Yellen emphasized that a change in forward guidance would not necessarily mean that the Fed would hike rates "in a couple of meetings." Yellen indicated that for the Fed to raise rates: 1) it must see further improvement in the job market; 2) it must expect further improvement in the job market beyond that; and 3) it must be "reasonably confident" that inflation will move toward the 2% goal.

The Consumer Price Index fell 0.7% in January, down 0.1% from a year earlier (the first year-over–year decline since October 2009). Ex–food & energy, the CPI rose 0.2% (+1.6% y/y). The estimate of 4Q14 GDP growth was revised to a 2.2% annual rate (vs. +2.6% in the advance estimate). Most of the revision was due to slower inventory growth. Private Domestic Final Sales (GDP less net exports, the change in inventories, and government) rose at a 3.5% annual rate (vs. +3.3% in 3Q14). Consumer spending rose at a 4.2% pace (vs. 4.3% in the advance estimate), while business fixed investment rose to +4.8% (from +1.9%). The week's other data were mixed, but consistent with moderate growth in the near term.

Next week, the economic calendar remains packed, with plenty of potentially market-moving data releases. The focus is expected to be on Friday's employment report, which should reflect an impact from adverse weather.


Indices

  Last Last Week YTD return %
DJIA 18214.42 17985.77 2.20%
NASDAQ 4987.89 4924.70 5.32%
S&P 500 2110.74 2097.45 2.52%
MSCI EAFE 1880.83 1863.88 5.97%
Russell 2000 1239.11 1227.91 2.86%

Consumer Money Rates

  Last 1 year ago
Prime Rate 3.25 3.25
Fed Funds 0.07 0.07
30-year mortgage 3.79 4.37

Currencies

  Last 1 year ago
Dollars per British Pound 1.552 1.669
Dollars per Euro 1.136 1.374
Japanese Yen per Dollar 118.740 102.380
Canadian Dollars per Dollar 1.242 1.108
Mexican Peso per Dollar 14.863 13.234

Commodities

  Last 1 year ago
Crude Oil 48.17 102.59
Gold 1217.99 1339.33

Bond Rates

  Last 1 month ago
2-year treasury 0.62 0.47
10-year treasury 2.01 1.68
10-year municipal (TEY) 3.25 2.80

Treasury Yield Curve – 02/27/2015


S&P Sector Performance (YTD) – 02/27/2015



Economic Calendar

March 2  —  Personal Income and Spending (January)
ISM Manufacturing Index (February)
March 3  —  Unit Auto Sales (February)
March 4  —  ADP Payroll Estimate (February)
ISM Non-Manufacturing Index (February)
Fed Beige Book
March 5  —  ECB Policy Meeting
March 6  —  Employment Report (February)
Trade Balance (January)
March 12  —  Retail Sales (February)
March 18  —  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 Feburary 26, 2015.

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