March 14th, 2012 9:13 AM by Mel Samick
There was a lot of volatility at the start of last week. The week started with a lower growth report from China and more suspense with respect to the Greece debt crisis. However, a couple of good news items started to settle the markets down. With the support of major banks and pension funds, Greece was successful at clinching a debt swap deal. Reluctantly, Israel has agreed that diplomacy with Iran and their potential nuclear threats is the route to go at the moment which, in turn, has eased any near term instability. By the end of the week, light sweet crude was trading at $107.50 per barrel while gold traded at $1,710 per ounce. Any negative impact from high commodity prices was offset by a modest economic recovery rate and strong economic indicators. For the week, all of the major indices ended flat. By week's end, the S&P closed at 1,370 while the Dow ended the trading week at 12,922.
The economic recovery gained momentum last week as the soft labor market showed a vital sign of improvement in the month of February. To investors' pleasant surprise, 227,000 new jobs were added to the economy, beating the market estimate of 204,000. However, the unemployment rate was unchanged at 8.3 percent. Private-sector employment was stronger than overall, adding 257,000 jobs against expectations of 220,000. Also, Wages and Hourly Work Hours were seen trending higher. In addition, unemployment claims for the week ended Feb 26 dipped to 351,000. In other economic news, the Trade Deficit increased in January to $52.6 billion mainly due to expensive petroleum imports. In another indication of a growing service sector, the Institute for Supply Management's indicator rose to 57.3 in February, the highest level over the last year. Also, Consumer Borrowing increased to $17.8 billion in January, reflecting the continued strength in auto sales and installment lending activities.
The Ten-Year treasury yield was up 5 basis points and ended the week at 2.04 percent after fluctuating the entire week on Greece debt uncertainly and European economic growth. However, mortgage rates moved in the opposite direction and were down last week. At the end of the week the Conforming Fixed 30-year rate leveled out at around 3.69 percent, while the Conforming Fixed 15-year rate finished around 2.93 percent. Standard 5/1 ARM rates were last seen hovering at around 2.75 percent.
This week investors will be looking towards the Fed meeting for any hint on QE3 and interest rates, which are expected to remain unchanged. In other major economic indicator releases, look for Retail Sales and Business Inventories on Tuesday and Producer Prices and Consumer Prices Indexes on Thursday and Friday respectively. These will provide yet more good indications surrounding current economic growth.
Information Provided by NYCB Capital Markets