Highlights of this Week’s Update:
- Markets and our office closed Monday, February 16th for Presidents’ Day.
- Call us today to set up your personal financial management/planning program if you have not yet done so.
- S. stock indices gain last week, while oil stabilizes.
- Interest rates edge higher for the week, but mortgage rates are still low compared to last year.
- S. jobs numbers continue to improve, but other issues still persist keeping timing of FED rate hike in question.
READ ON FOR FURTHER DETAILS………………………………………………………
Presidents’ Day-Monday, February 16th:
The U.S. financial markets will be closed next Monday, the 16th in observance of Presidents’ Day. Our offices will be closed as well. Banks will also be closed, so no withdrawals will be processed from investment accounts Monday as well.
Personal Planning/Financial Management:
We want to be sure all of you are set-up on our new personal financial management/planning program as soon as possible. Once your own planning information is in place, this new system provides you with an interactive financial management tool moving forward. Please call us today to schedule your own personal review, either in person or by phone, to get your planning system in place.
Last week saw volatility in the markets continue, but the major U.S. stock indices were able to produce gains across the board. The Dow Jones Industrial Average jumped 3.84% for the week ending last Friday, pushing it basically to breakeven for the year. The Standard & Poor’s 500 stock index rose 3.03% and is now still down .17% so far in 2015. (MarketWatch)
Interest rates rose last week, pushing yields on U.S. Treasuries higher along with mortgage rates. 30 year fixed rate mortgage rates ranged from around 3.625-3.80%. The 15 year fixed rate averaged 2.875-3.05%. (Bankrate.com) Oil prices were finally able to stabilize, with the price for a barrel of West Texas Intermediate Crude finishing the week at $52.34 per barrel, up $4.49. (CNBC)
U.S. Jobs Machine Shifts into Gear
The worst recession since the Great Depression has been followed by an economic recovery that has been tepid at best. More recently, however, the winds have shifted. Witness the growth in job creation in 2014 (3.12 million), which reached its best level since 1999 (3.18 million), according to data from the Bureau of Labor Statistics (BLS).
Meanwhile, weekly initial jobless claims, which measures new filings for unemployment insurance, continue to hover near historical lows (Dept. of Labor). In other words, employers are not only hiring more, they are collectively deciding they can’t afford to lose their current employees.
Yet, many of us don’t “feel” this newfound-sense of optimism. One problem is that the jobs numbers don’t’ distinguish the difference between full-time from part-time jobs, or employees that remain “under-employed” since the “great recession”. Those who live or depend on the energy sector are now also living under a cloud of uncertainty.
What’s the Fed to do?
While the Federal Reserve has yet to take a June rate hike off the table, many investors had given up on the idea of mid-year rate increase amid slowing inflation, the surging dollar, cutbacks rippling through the energy sector, and the struggles facing major economies outside the U.S. But a key component as to when the Fed will announce its first rate increase in almost a decade is job growth. And if we continue to see a repeat of January’s jobs report, rising rates may not be far away.
While the economy is showing few signs of wage pressures and inflation remains well below the Fed’s target (Bureau of Econ. Analysis), the latest labor report highlights the dilemma facing Fed officials. Hold off and risk new bubbles in the economy, or delay any tightening in policy since low inflation and weak wage growth suggest slack in the economy remains.
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1 The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be invested into directly. Past performance does not guarantee future results.
3 The S&P 500 Index is an unmanaged index of 500 larger companies which cannot be invested into directly. Past performance does not guarantee future results.
4 New York Mercantile Exchange front-month contract; Prices can and do vary; past performance does not guarantee future results.