A variety of resources at your service

May 14, 2021

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

The Consumer Price Index rose 0.8% in April (+4.2% y/y), up 0.9% excluding food and energy (+3.0% y/y). The increase reflected a surprise 10.0% jump in the index for used vehicles, a rebound from the low levels of a year ago (“base effects”), and restart pressures as the economy recovers. Fed officials repeated the view that increased inflation is likely to be transitory. The concern is that a temporary increase in inflation could boost long-term inflation expectations, but officials emphasized that the central bank has the tools to bring inflation down should that occur. Despite the increase in inflation hysteria, bond yields moved only modestly higher.

Retail sales were essentially flat in April (+51.2% y/y), which isn’t bad following the sharp 10.7% rise in March. Industrial production rose 0.7% in April (+16.5% y/y), held back by a 4.3% drop in motor vehicle output (reflecting a semiconductor shortage). Ex-motor vehicles, manufacturing output rose 0.8% (up 16.5% y/y and 2.3% higher than in February 2020).

Next week, the economic data are second tier and unlikely to be market-moving. Residential construction activity is expected to have improved in April. The Index of Leading Economic Indicators should be up by about 1.6% (no surprise, it’s a published formula and most of the components are known), led by the drop in jobless claims. FOMC policy meeting minutes (from late April) should reinforce the Fed’s view and may not cover new ground, but quotes taken out of context have the potential to influence the financial markets.


Indices

  Last Last Week YTD return %
DJIA 34021.45 34548.53 11.16%
NASDAQ 13124.99 13632.84 1.84%
S&P 500 4112.50 4201.62 9.49%
MSCI EAFE 2268.51 2295.82 5.63%
Russell 2000 2170.95 2241.42 9.93%

Consumer Money Rates

  Last 1 year ago
Prime Rate 3.25 3.25
Fed Funds 0.06 0.05
30-year mortgage 3.16 3.13

Currencies

  Last 1 year ago
Dollars per British Pound 1.4052 1.223
Dollars per Euro 1.2081 1.081
Japanese Yen per Dollar 109.47 107.25
Canadian Dollars per Dollar 1.216 1.405
Mexican Peso per Dollar 19.937 23.869

Commodities

  Last 1 year ago
Crude Oil 64.49 27.56
Gold 1836.80 1740.90

Bond Rates

  Last 1 month ago
2-year treasury 0.15 0.16
10-year treasury 1.64 1.58
10-year municipal (TEY) 1.52 1.42

Treasury Yield Curve – 05/14/2021

Chart

As of close of business 05/13/2021


S&P Sector Performance (YTD) – 05/14/2021


Chart

As of close of business 05/13/2021


Economic Calendar

May 17  —  Homebuilder Sentiment (May)
May 18  —  Building Permits, Housing Starts (April)
May 19  —  FOMC Minutes (April 2-28)
May 20  —  Jobless Claims (week ending May 15)
   —  Leading Economic Indicators (April)
May 21  —  Existing Home Sales (April)

 

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 Nay 13, 2021.

Securities offered through Raymond James Financial Services, Inc. Member FINRA / SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Chapman & Cardwell Capital Management is not a registered broker/dealer, nor is it affiliated with Raymond James Financial Services.

Raymond James financial advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all of the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Contact your local Raymond James office for information and availability. Links are being provided for informational purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. | Privacy Policy

© Chapman & Cardwell Capital Management. All Rights Reserved.