March 5, 2020
Chief Economist Scott Brown discusses the latest market data.
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.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|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|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||1.58||1.09|
|Last||1 month ago|
|10-year municipal (TEY)||1.25||1.17|
Treasury Yield Curve – 03/05/2021
As of close of business 03/04/2021
S&P Sector Performance (YTD) – 03/05/2021
|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.
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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.