Highlights of this Week’s Update:
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- S. stock indices rose slightly last week.
- Interest rates dipped for the week ending Friday.
- FED remains cautious on first interest rate hike but keeps door open for later this year.
- Greece uncertainties kept markets in check but possible agreement to be reached this week.
READ ON FOR MORE DETAILS……………………………………………..
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Last week the major U.S. stock indices managed to notch positive returns after a Fed meeting and concerns over Greece. The Dow Jones Industrial Average gained .65% and now is now 1.08% higher so far in 2015. The Standard & Poor’s 500 rose .76% on the week, making the year-to-date gain 2.48% through Friday. (MarketWatch)
Interest rates dipped for the week, with the yield for the 10 year U.S. Treasury down .13 to end at 2.26%. 30 year fixed rate mortgages ranged from 3.875-4.25%, while the 15 year fixed rates were 2.875-3.5% to end the week. (U.S. Treasury, Bankrate.com)
Gold rose $20.60 per ounce to end Friday at $1,203.40 per ounce, while oil fell .57 ending at $59.37 per barrel for West Texas Intermediate Crude. (CNBC)
The Fed –
There weren’t any big surprises at last week’s Federal Reserve meeting. If anything, the Fed remains on a track to boost interest rates later in the year, but the dovish tilt telegraphed a Fed that is not yet convinced the recent upbeat turn in the economic data are for real.
“Economic conditions are currently anticipated to evolve in a manner that will warrant only gradual increases” in the fed funds rate, Fed Chief Janet Yellen said at her press conference. But she was quick to add that she and other Fed officials “would like to see more decisive evidence that a moderate pace of economic growth will be sustained” before pulling the trigger on the first rate hike in almost 10 years.
Simply put, the weakness in the first quarter and the slow acceleration in the second quarter has injected a cautious attitude, and it’s reflected in the Fed’s stance.
More recently, the slowdown in the economy during the end of 2014 and the early part of 2015 was reflected in the upward tick in first-time claims for unemployment insurance. The downward trend has since resumed, and we witnessed a sharp increase in job creation in May (Bureau of Labor Statistics).
Greece update –
Creditors want Greece to agree to new reforms and a tighter budget before they give it more loans. Greece’s far left-led government came to power in January on the promise to end such measures, claiming austerity has led to unnecessary hardships. It’s a classic stalemate.
The headlines last week were far from encouraging:
- Germany’s Merkel Says Greece Accord Possible Only If Greek PM Tsipras Moves (Bloomberg)
- IMF Warns No Leeway on Payment as Merkel Urges Greece to Bow (Bloomberg)
- Does Alexis Tsipras actually want to keep Greece in the eurozone? (Wall Street Journal)
- Greeks Yank Bank Deposits as Talks Falter (Wall Street Journal)
The deadline for a deal is June 30th, when Greece owes the International Monetary Fund nearly 1.6 billion euros and is scheduled to pay pensions (Wall Street Journal). Without a deal, the current bailout agreement expires as of June 30. July 10, July 17, and July 20 become the next big deadlines for debt repayment. Without an agreement that unlocks more funds for Greece, it would likely default
BUT….what a difference a weekend can make. Today, European officials expect to see Greece agree to a deal by this Wednesday evening and expect the agreement would be announced Thursday morning. The global stock markets rallied on the news today, with the markets in both Germany and France rising around 3.8% today. (CNBC)
It’s hard to believe the first half of 2015 is almost over already. We wish you all a great week ahead and encourage you to call if you have any questions, or if we can be of further service in any way.
Your TEAM at F.I.G. Financial Advisory Services, Inc.
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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.
5 New York Mercantile Exchange front-month contract; Prices can and do vary; past performance does not guarantee future results.
6 London Bullion Market Association; gold fixing pricing at 3 p.m. London time; Prices can and do vary; past performance does not guarantee future results