Download Capital Markets Review

Capital Markets Review
3Q2015
Capital Markets Review
Consumer Sentiment
The University of Michigan Survey of Consumer
Sentiment Index is an economic indicator which
measures the degree of optimism that consumers feel
about the overall state of the economy and their personal financial situation.
51.70
93.00
112.00
As of December 31, 2014, +/- 1 standard deviation
of historical month-end values have ranged from
72.17% to 98.06%.
Home Prices
4.56
17.12
-19.01
The S&P/Case-Shiller Home Price Index is a
measurement of U.S. residential real estate prices,
tracking changes in top 20 metropolitan regions. This
indicator value represents the trailing year over year % As of December 2013, +/- 1 standard deviation of
change in the home prices index as of last month-end. historical month-end values have ranged from
-6.10% to +14.01%.
Yield Spreads
The spread between the yields of the 10 year US Treasury
Note and the 3 Month US Treasury Bill.
-1.91
1.89
4.39
As of December 31, 2014, +/- 1 standard deviation
of historical month-end values have ranged from
0.30% to 2.67%
Typical Range
Current Range
Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC.
Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor.
Cambridge and CFG, are not affiliated.
Core Inflation
Inflation
-0.02
14.59
The Consumer Price Index (CPI) NSA (non-seasonally
-2.99
adjusted) measures changes in the price level of a
market basket of consumer goods and services purchased by households. This indicator value represents As of December 31, 2013, +/- 1 standard deviation
the trailing year over year % change in the CPI index as of historical month-end values have ranged from
of last month-end.
0.67% to 6.58%.
10 Year U.S. Treasury Yield
The average interest rate on the 10 year U.S. Treasury
note issued by the U.S. Government
1.47
Interest Rates
1.92
15.84
As of December 31, 2014, +/- 1 standard deviation
of historical month-end values have ranged from
3.24% to 8.85%.
Municipal Yield Ratios: no significant changes
Muni Spreads
Municipals vs. Similar Credit Quality Corporate Bonds: Yield to Worst down from previously reported by still
volatile, pointing to the need for in-depth credit analysis.
Typical Range
Current Range
Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC.
Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor.
Cambridge and CFG, are not affiliated.
Economic Expansion
Gross Domestic Product seasonally adjusted measures
the total market value of the United States’ output of
goods and services during a specific time period. It is
measured on a quarterly basis. This indicator value
represents the trailing quarter over quarter % change
as of last month-end.
-10.00
2.20
16.90
As of December 31, 2013, +/- 1 standard deviation
of historical month-end values have ranged from –
0.68% to +7.25%.
Unemployment
The Bureau of Labor Statistics measures employment
and unemployment of all persons over the age of 15
5.50
10.80
2.50
using two different labor force surveys conducted by
As of December 31, 2014, +/- 1 standard deviation
the United States Census Bureau and the Bureau of
of historical month-end values have ranged from
labor Statistics that gather employment statistics
monthly. The data reported here is seasonally adjusted 4.18% to 7.49%.
to account for seasonal gains in employment leading
up to Christmas.
Political Environment
The chief scenario which the U.S. economy goes into recession in 2013 is through a lawmaker-induced policy
shock, not the sort of economic imbalances that typically lead to economic downturns.
Typical Range
Current Range
Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC.
Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor.
Cambridge and CFG, are not affiliated.
Market Volatility
The Chicago Board Options Exchange Volatility Index
(CBOE VIX) measures annualized implied volatility
conveyed by S&P 500 stock index option prices. The
indicator value reflects a month end reading of the
trailing daily average for the month.
10.42 14.81
62.25
As of December 31, 2014, +/- 1 standard deviation of
historical month-end values have ranged from
12.22% to 27.65%.
Oil and Commodities
DJ AIG Commodity Spot Index, Spot Light Crude, Corn Futures, & Spot Copper: all decreased
from previously reported
Risk looms of geopolitical threats to any major exporter
China
China Equity Performance: A index down from previously reported
China vs. Emerging Markets: indices down from previously reported
Consumer confidence is waning
On the supply side, decades-old attempts to control population growth are now limiting further
gains in the labor force, while slower growth in investment spending should reduce gains in the
capital stock.
Although the ECB’s planned purchases of Spanish government debt, in particular, has not started (as Spain has not yet
signed a memorandum of understanding regarding its fiscal policies with the European Union), a key factor in reducing
yields on Spanish government bonds to date has been the fact that the ECB will not claim senior creditor status this time.
For example, Spanish 10-year bond yields fell below 5% the week beginning January 7 for the first time in more than a year.
This is one reason why this round ECB bond purchases needed to be rebranded with a new name—Outright Monetary
Transactions– to help distinguish it from earlier ECB bond purchases, in which the ECB declared itself to be a senior creditor.
In this way, the ECB will place itself in line with private bond buyers as a confidence-building measure.
International
The election if Shinzo Abe and the return of the Liberal Democratic Party (LDP) to power in Japan has brought the expected
effect so far in terms of yen depreciation and stock price appreciation. Thus, investors in Japanese equities who hedged the
yen exposure have done well. The question is whether the Bank of Japan will achieve their new inflation target of 2% annual
inflation. If the central bank fails to deliver and nominal GDP growth continues to languish near zero, investor disenchantment will likely follow.
Typical Range
Current Range
Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC.
Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor.
Cambridge and CFG, are not affiliated.