Clarksville, TN – The September Employment Report (delayed from October 6) was disappointing relative to expectations (although hardly “weak”). Nonfarm payrolls rose by 148,000 (median forecast: +180,000). The two previous months were revised a net 9,000 higher.
Note that seasonal adjustment is often tricky in September (due to the start of the school year). The unemployment rate edged down to 7.2%, while the labor force participation rate held steady. The employment/population rate held steady, but was down slightly from a year earlier.
The financial markets interpreted the payroll data as suggesting decreased odds that the Fed will begin to taper the rate of asset purchases in December. Between now and the December Fed policy meeting, the economic data reports are going to be distorted due to the government shutdown.The markets see the distorted data and continued uncertainty in Washington as likely to keep the Fed from tapering this year. However, the Fed should be able to read through much of the noise and it’s very unlikely that we’ll see another government shutdown (lawmakers may not be able to agree to a grand bargain on the deficit, but they can at least agree to punt the ball down the field).
Next week, delayed government economic reports will arrive. The retail sales figures are likely to get the most weight and have some potential to surprise. The Fed policy meeting is expected to be a non-event – that is, no change in the pace of asset purchases.
There is no press briefing after the meeting. Investors will look to the wording of the policy statement for any changes that would suggest what the Fed might do in December. On Friday, the ISM manufacturing data will provide an important read on the factor sector.
Indices
Last | Last Week | YTD return % | |
DJIA | 15509.21 | 15371.65 | 18.35% |
NASDAQ | 3928.96 | 3863.15 | 30.12% |
S&P 500 | 1752.07 | 1733.15 | 22.85% |
MSCI EAFE | 1896.55 | 1863.81 | 18.24% |
Russell 2000 | 1118.85 | 1102.27 | 31.73% |
Consumer Money Rates
Last | 1-year ago | |
Prime Rate | 3.25 | 3.25 |
Fed Funds | 0.09 | 0.17 |
30-year mortgage | 4.13 | 3.41 |
Currencies
Last | 1-year ago | |
Dollars per British Pound | 1.620 | 1.602 |
Dollars per Euro | 1.380 | 1.295 |
Japanese Yen per Dollar | 97.360 | 79.810 |
Canadian Dollars per Dollar | 1.042 | 0.994 |
Mexican Peso per Dollar | 12.959 | 12.988 |
Commodities
Last | 1-year ago | |
Crude Oil | 96.71 | 85.33 |
Gold | 1350.31 | 1702.98 |
Bond Rates
Last | 1-month ago | |
2-year treasury | 0.30 | 0.33 |
10-year treasury | 2.50 | 2.63 |
10-year municipal (TEY) | 4.37 | 4.52 |
Treasury Yield Curve – 10/25/2013
S&P Sector Performance (YTD) – 10/25/2013
October 28th |
— |
Industrial Production (September) Pending Home Sales Index (September) |
October 29th |
— |
Producer Price Index (September) Retail Sales (September) Consumer Confidence (October) |
October 30th |
— |
ADP Payroll Estimate (October) Consumer Price Index (September) FOMC Policy Decision, no press briefing |
October 31st |
— |
Jobless Claims (week ending October 26th) Chicago Purchasing Managers Index (October) |
November 1st |
— |
ISM Manufacturing Index (October) Motor Vehicle Sales (October) |
November 7th |
— |
Real GDP (3Q13, advance estimate) |
November 8th |
— |
Employment Report (October) |
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 October 24th, 2013.
©2013 Raymond James Financial Services, Inc. member FINRA / SIPC.