Market Commentary by Scott J. Brown, Ph.D., Chief Economist
Retail sales fell 0.2% in May, matching the consensus forecast, but not quite as expected, as auto dealership sales rose 0.8% instead of falling (as the unit sales reported by the automakers did, seasonally adjusted). Ex-autos, sales fell 0.4%, pushed down partly by lower gasoline prices. Sales of building materials fell 1.7%, following a 2.3% drop in April – yet, sales of building materials for the first five months of the year were up 11.1% vs. the same period in 2011. That’s not weak.
Overall retail sales were up 7.0% y/y for the first five months of the year. Hence, this appears to be a weather story – the same story we saw in nonfarm payrolls (stronger in January and February at the expense of slower numbers in March, April, and May. Note that the folks at the Fed are smart enough to figure this out.
The PPI fell 1.0% in May, a larger drop than expected, with the core rate at 0.2%, matching expectations. The core index for intermediate goods fell 0.2% and the core index for crude materials fell 1.3% (following a 1.8% drop in April). Pipeline inflationary pressures are now negative, but not enough (we believe) for the Fed to undertake more accommodation.Indices
 | Last | Last Week | YTD return % |
DJIA | 12651.91 | 12460.96 | 3.56% |
NASDAQ | 2836.33 | 2831.02 | 8.87% |
S&P 500 | 1329.10 | 1314.99 | 5.69% |
MSCI EAFE | 1360.75 | 1361.94 | -3.67% |
Russell 2000 | 762.34 | 760.34 | 2.89% |
Consumer Money Rates
 | Last | 1-year ago |
Prime Rate | 3.25 | 3.25 |
Fed Funds | 0.20 | 0.12 |
30-year mortgage | 3.67 | 4.51 |
Currencies
 | Last | 1-year ago |
Dollars per British Pound | 1.553 | 1.639 |
Dollars per Euro | 1.260 | 1.447 |
Japanese Yen per Dollar | 79.310 | 80.520 |
Canadian Dollars per Dollar | 1.025 | 0.968 |
Mexican Peso per Dollar | 13.988 | 11.798 |
Commodities
 | Last | 1-year ago |
Crude Oil | 83.91 | 99.37 |
Gold | 1620.03 | 1520.48 |
Bond Rates
 | Last | 1-month ago |
2-year treasury | 0.28 | 0.26 |
10-year treasury | 1.59 | 1.85 |
10-year municipal (TEY) | 3.18 | 2.97 |
Treasury Yield Curve – 6/15/2012
S&P Sector Performance (YTD) – 6/15/2012
Economic Calendar
June 17th |
 — |
Greece Votes |
June 20th |
 — |
FOMC Policy Decision Bernanke Press Briefing |
July 4th |
 — |
Independence Day (markets closed) |
July 6th |
 — |
Employment Report (June) |
Important Disclosures
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) assume a 35% tax rate on triple-A rated, tax-exempt insured revenue bonds.
Material prepared by Raymond James for use by its financial advisors.
The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Data source: Bloomberg, as of close of business June 14th, 2012.
©2012 Raymond James Financial Services, Inc. member FINRA / SIPC.