Chief Economist Scott Brown discusses the latest market data.
The April 27-28 FOMC minutes noted that “a number of participants suggested that if the economy continued to make rapid progress toward the committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.” That means that a small minority of Fed officials are considering whether to start thinking about tapering asset purchases.
Initial claims for unemployment benefits fell to 444,000 – trending lower, but still relatively high by pre-pandemic standards. Existing home sales fell short of expectations in April, restrained by the limited number of homes for sale. The Conference Board’s Index of Leading Economic Indicators jumped 1.6% in April, with half of the increase due to the drop in jobless claims. Single-family building permits fell 3.8% in April (+70.7% y/y).
Next week, the economic calendar is busy. Inflation concerns may (indirectly) dampen the Conference Board’s Consumer Confidence Index in May. (These were more explicit in the mid-May UM Consumer Sentiment results.) The second estimate of 1Q21 GDP growth is likely to be close to the advance estimate (+6.4%). Durable goods orders and shipments, personal spending, and advance economic indicators (April inventories and merchandise trade) will help to refine estimates of 2Q21 GDP growth. The April PCE Price Index (the Fed’s chief inflation gauge, included in the personal income and spending report) should rise less than the CPI did.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.4206||1.222|
|Dollars per Euro||1.2205||1.095|
|Japanese Yen per Dollar||108.69||107.61|
|Canadian Dollars per Dollar||1.203||1.396|
|Mexican Peso per Dollar||19.892||22.862|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||1.52||1.37|
Treasury Yield Curve – 05/21/2021
As of close of business 05/20/2021
S&P Sector Performance (YTD) – 05/21/2021
|May 25||—||New Home Sales (April)|
|—||CB Consumer Confidence (May)|
|May 27||—||Jobless Claims (week ending May 22)|
|—||Durable Goods Orders (April)|
|—||Real GDP (1Q21, 2nd estimate)|
|—||Pending Home Sales Index (April)|
|May 28||—||Advance Economic Indicators (April)|
|—||Personal Income and Spending (April)|
|—||Chicago Business Barometer (May)|
|—||UM Consumer Sentiment (May)|
|May 31||—||Memorial Day (markets closed)|
|June 1||—||ISM Manufacturing Index (May)|
|June 3||—||ISM Services Index (May)|
|June 4||—||Employment Report (May)|
|June 16||—||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.
The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor’s returns. U.S. 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. U.S. 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 U.S. 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. 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 May 20, 2021.
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