Chandler Bond Market Review

Economic Roundup June 2013

Consumer Prices

In April, overall CPI inflation declined to 1.1% on a year-over-year basis from 1.5% in March.  The year-over-year Core CPI (CPI less food and energy) edged down to 1.7% from 1.9%.  The core inflation rate is trending below the Fed’s long-term goal of 2.0% and remains below the trigger rate for policy action of 2.5%.

Retail Sales

In April, Retail Sales rose 3.6% on a year-over-year basis.  On a month-over-month basis, Retail Sales increased 0.1% in April.  Overall, recent consumer spending trends have held up well in spite of headwinds from higher payroll taxes, rising gas prices, a delay in tax refunds, and ongoing uncertainty about the government’s fiscal policy.  However, recent data may indicate these trends may be decelerating. 

Labor Markets

The May employment report showed that payrolls increased by 175,000 (slightly better than the 167,000 consensus estimate).  However, the unemployment rate rose to 7.6% in May from 7.5% in April, driven by an increase in the labor force. Private payrolls increased 178,000 (in line with expectations), while government jobs fell 3,000 in May.  The net revisions in nonfarm payrolls for March and April were down 12,000.  Overall, improvement in the labor market remains modest.

Housing Starts

Single-family housing starts declined 2.1% in April to 610,000 from 623,000 in March.  Housing permits increased 3.0% in the month which was stronger than expected.  Recent housing data suggests that the housing market may have lost some momentum after a relatively strong start to the year. 

Credit Spreads June 2013

Credit Spreads June 2013

Economic Data June 2013

Economic Data June 2013

 

 

RISKS AND OTHER IMPORTANT CONSIDERATIONS

This report is provided for general information purposes only and should not be construed as specific legal, tax, or financial planning advice. All opinions and views constitute judgments or relevant information as of the date of writing and such information may become outdated or superseded at any time without notice. This report is not intended to constitute an offer, solicitation, recommendation or advice regarding any securities or investment strategy. This information should not be regarded by recipients as a substitute for the exercise of their own judgment. Fixed income investments are subject to interest, credit, and market risk. Interest rate risk: the value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market in general could decline due to economic conditions,especially during periods of rising interest rates.

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