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Weekly Market Snapshot

May 18, 2018

Market Commentary
by Scott J. Brown, Ph.D., Chief Economist

The House-imposed deadline for NAFTA passed with no agreement in place, but the markets took that in stride. Reports paint a picture of a fracture among White House officials on trade and it’s unclear whether President Trump will up the stakes. Worries about supply chain disruptions are affecting the stock market. The 10-year Treasury yield moved above 3%.

Retail sales rose about as expected in April, but upward revisions to February and March yielded a bit brighter picture for consumer spending growth in 2Q18 (following a lackluster 1Q18). Other economic data releases were uneventful. The nomination hearing for Fed Vice Chair-nominee Richard Clarida went smoothly. Clarida’s appointment will bring important monetary policy expertise to the Fed’s Board of Governors.

Next week, the economic calendar is relatively sparse. Home sales figures are more important in the spring, but are also noisy. The report on durable goods will be key. Orders for nondefense capital goods ex-aircraft slowed in 1Q18. Was that a temporary lull? Investors will look for new clues in the FOMC minutes, but we’re unlikely to learn much (a June 13 rate hike is a near certainty at this point). Minutes of the previous policy meeting noted that “several” Fed officials thought that the federal funds rate might eventually need to be set above a neutral level for a period. Fed Chair Powell will speak on Friday, but his comments are unlikely to be market-moving and many investors will have already checked out ahead of the three-day weekend.


  Last Last Week YTD return %
DJIA 24713.98 24739.53 -0.02%
NASDAQ 7382.47 7404.98 6.94%
S&P 500 2720.13 2723.07 1.74%
MSCI EAFE 2050.45 2043.79 -0.02%
Russell 2000 1625.29 1603.72 5.85%

Consumer Money Rates

  Last 1 year ago
Prime Rate 4.75 4.00
Fed Funds 1.69 0.91
30-year mortgage 4.79 3.99


  Last 1 year ago
Dollars per British Pound 1.352 1.294
Dollars per Euro 1.180 1.121
Japanese Yen per Dollar 110.77 111.49
Canadian Dollars per Dollar 1.281 1.360
Mexican Peso per Dollar 19.740 18.838


  Last 1 year ago
Crude Oil 71.49 50.33
Gold 1289.40 1253.60

Bond Rates

  Last 1 month ago
2-year treasury 2.56 2.44
10-year treasury 3.10 2.92
10-year municipal (TEY) 3.91 3.78

Treasury Yield Curve – 05/18/2018


As of close of business 05/17/2018

S&P Sector Performance (YTD) – 05/18/2018


As of close of business 05/17/2018

Economic Calendar

May 23  —  New Home Sales (April)
 —  FOMC Minutes (May 1-2)
May 24  —  Jobless Claims (week ending May 19)
 —  Existing Home Sales (April)
May 25  —  Durable Goods Orders (April)
 —  Fed Chair Powell speaks (“Financial Stability and Central Bank Transparency”)
 —  UM Consumer Sentiment (May)
May 28  —  Memorial Day Holiday (Markets closed)
May 29  —  CB Consumer Confidence (May)
May 30  —  ADP Payroll Estimate (May)
 —  Real GDP (1Q18, 2nd estimate)
 —  Fed Beige Book
May 31  —  Personal Income and Spending (April)
 —  Chicago Business Barometer (May)
June 1  —  Employment Report (May)
 —  ISM Manufacturing Index (May)
June 13  —  FOMC Policy Decision (Powell press conference)


All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. 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 May 17, 2018.

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