General market news
• Late Friday, 10-year Treasuries reached their lowest point in 14 months, with a yield of 2.30 percent. The 30-year Treasury also hit a 14-month low of 3.10 percent. This downward trend could persist into the end of the year, as economic data continues to be mixed and the Federal Reserve exits its bond-buying program. Global geopolitical concerns are also adding to the safety move.
• Equity markets continue to recover from their modest sell-off earlier in the month. The S&P 500 gained 1.28 percent last week, putting it back within 36 points, or 1.8 percent, of an all-time high.
• The minutes from the Fed’s July 30 meeting are set to be released on Wednesday. We don’t expect to see any major developments, aside from ongoing concerns about weakness on the employment front.
• Emerging equity markets continue to fare well in 2014 after a very challenging 2013. Strong performance last week helped push the MSCI Emerging Markets Index to the head of the pack year-to-date.
Equity Index
Week-to-Date % Month-to-Date % Year-to-Date % 12-Month %
S&P 500
1.28% 1.40% 7.14% 20.12%
Nasdaq Composite
2.17% 2.28% 7.73% 25.36%
DJIA
0.78% 0.83% 2.04% 12.84%
MSCI EAFE
1.96% −1.27% 1.92% 12.12%
MSCI Emerging Markets
2.65% 0.75% 9.08% 14.85%
Russell 2000
0.95% 1.99% −1.13% 12.55%
Source: Bloomberg
Fixed Income Index
Month-to-Date % Year-to-Date % 12-Month %
U.S. Broad Market
0.99% 4.90% 5.80%
U.S. Treasury
1.16% 4.25% 4.26%
U.S. Mortgages
0.82% 4.29% 5.45%
Municipal Bond
0.89% 7.73% 9.93%
Source: Bloomberg
What to look forward to
The upcoming week will be light on economic releases, but we will see data for housing and consumer inflation.
The Consumer Price Index (CPI) is expected to remain at an annualized rate of about 2 percent, while CPI ex Food and Energy is expected to come in slightly lower, at 1.9 percent annualized.
On the housing front, both Housing Starts and Building Permits are expected to rebound after weaker numbers in the month of June.
Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Barclays Capital Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Barclays Capital Mortgage-Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Barclays Capital Municipal Bond Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. The Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index measures the performance of intermediate (1- to 10-year) U.S. TIPS.
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Mark Gallagher is a financial advisor located at 2586 East 7th Avenue #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.
Authored by the Investment Research team at Commonwealth Financial Network.
© 2014 Commonwealth Financial Network®