Clarksville, TN – Fed Chair Janet Yellen did not commit to raising rates in December, but she continued to lay the groundwork for an initial hike. She noted that with interest rates close to zero, the consequence of raising rates too soon or too late is not symmetric, which suggests that the Fed should be cautious as it prepares to tighten monetary policy.
However, she also noted that monetary policy affects the economy with a lag, and waiting too long raises risks for the economy and for financial stability.
She continued to emphasize that 1) monetary policy will still be accommodative after the initial rate hike, 2) future policy moves will remain data-dependent, and 3) economic conditions are expected to warrant a gradual pace of tightening.Next week, financial market participants will continue to eye the upcoming Fed policy meeting. An initial rate increase is not completely factored in. The important economic data are skewed toward the end of the week. Retail sales are expected to remain consistent with a moderate pace of consumer spending growth (lower gasoline prices should reduce gasoline sales).
Indices
Last | Last Week | YTD return % | |
DJIA | 17477.67 | 17813.39 | -1.94% |
NASDAQ | 5037.53 | 5116.14 | 6.37% |
S&P 500 | 2049.62 | 2088.87 | -0.45% |
MSCI EAFE | 1740.66 | 1740.07 | -1.93% |
Russell 2000 | 1170.57 | 1198.02 | -2.83% |
Consumer Money Rates
Last | 1 year ago | |
Prime Rate | 3.25 | 3.25 |
Fed Funds | 0.11 | 0.12 |
30-year mortgage | 4.07 | 3.89 |
Currencies
Last | 1 year ago | |
Dollars per British Pound | 1.494 | 1.567 |
Dollars per Euro | 1.056 | 1.233 |
Japanese Yen per Dollar | 123.460 | 119.370 |
Canadian Dollars per Dollar | 1.333 | 1.138 |
Mexican Peso per Dollar | 16.546 | 14.119 |
Commodities
Last | 1 year ago | |
Crude Oil | 41.08 | 67.38 |
Gold | 1051.13 | 1204.36 |
Bond Rates
Last | 1 month ago | |
2-year treasury | 0.92 | 0.90 |
10-year treasury | 2.31 | 2.32 |
10-year municipal (TEY) | 3.16 | 3.27 |
Treasury Yield Curve – 12/04/2015
As of close of business 12/03/2015
Economic Calendar
Dec 10th | — | Jobless Claims (week ending December 5th) |
Dec 11th | — | Producer Price Index (November) Retail Sales (November) Consumer Sentiment (mid-November) |
Dec 15th | — | Consumer Price Index (November) |
Dec 16th | — | Building Permits, Housing Starts (November) Industrial Production (November) FOMC Policy Decision, Yellen Press Conference |
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 December 3rd, 2015.