Clarksville, TN – The economic data reports remained mixed. Real GDP fell at a 0.7% annual rate in the second estimate for 1Q15 (vs. +0.2% in the advance estimate). The revision largely reflected slower inventory growth and a wider trade deficit. Consumer spending rose at a 1.8% pace (vs. +1.9%), while business fixed investment fell 2.8% (vs. -3.8%).
There is currently a debate about whether the seasonal pattern in a number of GDP components may have changed post-recession. Unfortunately, we really don’t have enough data to say for sure.
One way around this is to look at year-over-year changes. GDP rose 2.7% y/y, with Domestic Final Sales at 2.9%. Corporate profits fell in the preliminary estimate, no surprise.Durable goods orders fell 0.5% in April, reflecting only a partial retreat in aircraft orders (which had surged in March). More importantly, core capital goods orders rose 1.0%, following a 1.5% gain in March (they plunged 5.1% in February).
The Chicago Purchasing Managers’ Index unexpectedly fell below the breakeven level in May, with new orders, backlogs, production and employment all contracting.
Except for the Chicago PMI, financial market participants largely ignored the economic data, seemingly anxious about developments in the rest of the world.
Next week, we’ll receive some fresh economic data (ISM surveys, motor vehicle sales, the Fed Beige Book), but the focus is likely to be on Friday’s job market figures. The end of the school year often presents some difficulties for the seasonal adjustment (we can expect to add about a million jobs before adjustment).
The unemployment rate should hold steady. The employment/population ratio is trending gradually higher, but still suggests an ample amount of slack in the job market.
Indices
Last | Last Week | YTD return % | |
DJIA | 18126.12 | 18285.74 | 1.70% |
NASDAQ | 5097.98 | 5090.79 | 7.64% |
S&P 500 | 2120.79 | 2130.82 | 3.01% |
MSCI EAFE | 1913.47 | 1948.41 | 7.81% |
Russell 2000 | 1253.10 | 1256.74 | 4.02% |
Consumer Money Rates
Last | 1 year ago | |
Prime Rate | 3.25 | 3.25 |
Fed Funds | 0.06 | 0.07 |
30-year mortgage | 3.96 | 4.12 |
Currencies
Last | 1 year ago | |
Dollars per British Pound | 1.532 | 1.671 |
Dollars per Euro | 1.095 | 1.359 |
Japanese Yen per Dollar | 123.950 | 101.850 |
Canadian Dollars per Dollar | 1.244 | 1.088 |
Mexican Peso per Dollar | 15.315 | 12.874 |
Commodities
Last | 1 year ago | |
Crude Oil | 57.68 | 102.72 |
Gold | 1188.40 | 1258.14 |
Bond Rates
Last | 1 month ago | |
2-year treasury | 0.61 | 0.54 |
10-year treasury | 2.11 | 1.90 |
10-year municipal (TEY) | 3.56 | 3.20 |
Treasury Yield Curve – 05/29/2015
S&P Sector Performance (YTD) – 05/29/2015
Economic Calendar
May 29th | — | Real GDP (1Q15, 2nd estimate) Chicago Purchasing Managers Index (May) Consumer Sentiment (May) |
June 1st | — | Personal Income and Spending (April) ISM Manufacturing Index (May) |
June 2nd | — | Motor Vehicle Sales (May) |
June 3rd | — | ADP Payroll Estimate (May) Trade Balance (April) ISM Non-Manufacturing Index (May) Fed Beige Book |
June 4th | — | Jobless Claims (week ending May 30) |
June 5th | — | Employment Report (May) |
June 11 | — | Retail Sales (May) |
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 May 21st, 2015.