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Weekly Market Snapshot

July 2, 2015

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

Once again, financial market participants’ views on Greece shifted from optimism to pessimism, from confusion to, well, even more confusion. Greece decided to have a referendum (July 5) on whether to accept the bailout conditions proposed by the institutions (the European Commission, the European Central Bank and the International Monetary Fund). The country missed a scheduled June 30 payment to the IMF (which considers Greece to be “in arrears” rather than “in default”). Greek Prime Minister Alexis Tsipras wrote that the country was “prepared to accept” a deal with small modifications, and then went on TV to urge citizens to vote “no.” European leaders said there would be no further negotiations until after the vote.

The economic data were mixed. Nonfarm payrolls rose by 223,000, slightly less than expected (230,000), but the two previous months were revised 60,000 lower. Private-sector payrolls averaged a 221,000 monthly average in 2Q15. The unemployment rate fell to 5.3%, but that reflected a drop in labor force participation. Don’t read too much into that, as the data are subject to statistical noise and seasonal adjustment can be tricky in June. Consumer confidence rose more than expected. The ISM Manufacturing Index was moderate.

Next week, the economic calendar thins out (but will pick up again in the following week). Market participants will arrive to work Monday ready to react to the result of the Greek referendum. However, it’s unclear what will happen regardless of whether the country votes “yes” (to accept bailout conditions) or “no.” There is much haste to take care of this one way or another (before summer vacation season). Most likely, the can will be kicked down the road for a few months – but who knows?


Indices

  Last Last Week YTD return %
DJIA 17757.91 17966.07 -0.37%
NASDAQ 5013.12 5112.41 5.85%
S&P 500 2077.42 2108.58 0.90%
MSCI EAFE 1856.10 1913.50 4.58%
Russell 2000 1256.40 1283.28 4.29%

Consumer Money Rates

  Last 1 year ago
Prime Rate 3.25 3.25
Fed Funds 0.13 0.09
30-year mortgage 4.16 4.12

Currencies

  Last 1 year ago
Dollars per British Pound 1.566 1.714
Dollars per Euro 1.111 1.369
Japanese Yen per Dollar 122.920 101.580
Canadian Dollars per Dollar 1.252 1.067
Mexican Peso per Dollar 15.728 12.967

Commodities

  Last 1 year ago
Crude Oil 56.96 105.34
Gold 1172.43 1325.21

Bond Rates

  Last 1 month ago
2-year treasury 0.64 0.73
10-year treasury 2.38 2.41
10-year municipal (TEY) 3.65 3.54

Treasury Yield Curve – 07/02/2015


As of close of business 7/01/2015


S&P Sector Performance (YTD) – 07/02/2015



As of close of business 7/02/2015


Economic Calendar

July 5  —  Greece votes
July 6  —  ISM Non-Manufacturing Index (June)
July 7  —  Trade Balance (May)
July 8  —  FOMC Minutes (June 16-17)
July 9  —  Jobless Claims (week ending July 4)
July 10  —  Yellen Speaks ("The U.S. Economic Outlook")
July 14  —  Retail Sales (June)
July 15  —  Producer Price Index (June)
Industrial Production (June)
Yellen Monetary Policy Testimony (House)
July 16  —  Yellen Monetary Policy Testimony (Senate)
July 17  —  Consumer Price Index (June)
July 29  —  FOMC Policy Decision (no Yellen Press Conference)
July 30  —  Real GDP (advance 2Q15, benchmark revisions)
Aug 7  —  Employment Report (July)
Sept 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 July 1, 2015.

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