March 19, 2020
Chief Economist Scott Brown discusses the latest market data.
As expected, the Federal Open Market Committee left short-term interest rates unchanged and did not alter its monthly pace of asset purchases. Fed officials revised their growth outlook for this year to be higher (median: +6.5% 4Q21/4Q20) and raised their inflation outlook moderately (+2.4% 4Q21/4Q20). Most Fed officials (11 of 18) still expected the overnight lending rate to remain near 0% through 2023. In his press conference, Chair Powell repeated that the Fed wants to see inflation and labor market conditions a lot closer to its goals before tightening policy. He also did not seem too concerned with the rise in long-term interest rates.
Weather was a major factor in the mid-month economic reports. Retail sales fell 3.0% in February, but with an upward revision to January (+7.6%). Taken together, retail sales for the first two months of the year were up 7.0% from the first two months of 2020. Industrial production fell 2.2%, despite a 7.4% jump in the output of utilities (cold weather), as manufacturing output dropped 3.1% (-3.8% y/y). Single-family building permits fell 10.0% in February, still up 15.0% year-over-year. We should see a significant rebound in each of the reports for March.
Next week, weather is likely to be a factor in the reports on home sales and durable goods orders. February personal spending figures may reflect some weather issues in February, but the underlying trends should be supportive of a stronger consumer outlook. Treasury Secretary Yellen and Fed Chair Powell will testify to Congress on the fiscal and monetary policy response to the pandemic, but their comments are not expected to be market-moving
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.3925||1.149|
|Dollars per Euro||1.1915||1.069|
|Japanese Yen per Dollar||108.89||110.71|
|Canadian Dollars per Dollar||1.249||1.451|
|Mexican Peso per Dollar||20.486||24.031|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||1.75||1.25|
Treasury Yield Curve – 03/19/2021
As of close of business 03/18/2021
S&P Sector Performance (YTD) – 03/19/2021
|March 22||—||Existing Home Sales (February)|
|March 23||—||New Home Sales (February)|
|March 24||—||Durable Goods Orders (February)|
|March 25||—||Jobless Claims (week ending March 20)|
|—||Real GDP (4Q20, 3rd estimate)|
|March 26||—||Personal Income and Spending (February)|
|—||UM Consumer Sentiment (March)|
|March 30||—||CB Consumer Confidence (March|
|April 1||—||ISM Manufacturing (March)|
|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 18, 2021.
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