Chief Economist Scott Brown discusses the latest market data.
Fed Chair Powell covered no new ground in his monetary policy testimony to Congress. Powell noted that while labor market conditions have improved, “there is still a long way to go.” Inflation is temporarily boosted by base effects and production bottlenecks. “Substantial further progress” toward the Fed’s goals, a trigger for tapering the monthly pace of asset purchases, “is still a ways off,” but the Fed will provide advance notice before tapering.
Retail sales rose 0.6% in the initial estimate for June (+20.3% y/y), up 1.3% (+17.5% y/y) ex-autos, tracking more than 10% above the pre-pandemic trend (that’s a lot). The Consumer Price Index (CPI) rose 0.9% in June (+5.4% y/y, vs. +0.6% y/y in June 2020). Ex-food and energy, the CPI rose 0.9% (+4.5% y/y, vs. +1.2% y/y a year ago). A 10.5% further jump in used car prices accounted for more than a third of the increase. Industrial production rose 0.4% in June (+9.8% y/y), boosted by a 2.7% increase in the output of utilities (warm weather). Manufacturing output was flat, held back by a 6.6% decline in the output of motor vehicles (reflecting the semiconductor shortage).
Next week, the economic calendar thins. Residential construction figures are likely to reflect supply constraints (focus on single-family permits, which are less volatile). Components of the Index of Leading Economic Indicators were more mixed in June, but mostly positive.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.3819||1.255|
|Dollars per Euro||1.1795||1.138|
|Japanese Yen per Dollar||110.29||107.27|
|Canadian Dollars per Dollar||1.259||1.357|
|Mexican Peso per Dollar||19.884||22.447|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||1.323||1.476|
Treasury Yield Curve – 07/16/2021
As of close of business 07/15/2021
S&P Sector Performance (YTD) – 07/16/2021
|July 19||—||Homebuilder Sentiment (July)|
|July 20||—||Building Permits. Housing Starts. (June)|
|July 22||—||Jobless Claims (week ending July 17)|
|—||Existing Home Sales (June)|
Leading Economic Indicators (June)
|July 27||—||Durable Goods Orders (June)|
|—||CB Consumer Confidence (July)|
|July 28||—||FOMC Policy Decision|
|July 29||—||Real GDP (2Q21 advance estimate, benchmark revisions)|
|July 30||—||Employment Cost Index (2Q21)|
|August 6||—||Employment Report (July)|
|September 6||—||Labor Day Holiday (markets closed)|
|September 22||—||FOMC Policy Decision|
All expressions of opinion reflect the judgment of the author 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 July 15, 2021.
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