Chandler Bond Market Review

Economic Roundup July 2013

Consumer Prices
In May, overall CPI inflation rose to 1.4% on a year-over-year basis from 1.1% in April.  The year-over-year Core CPI (CPI less food and energy) was unchanged at 1.7%.  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 May, Retail Sales rose 4.3% on a year-over-year basis.  On a month-over-month basis, Retail Sales increased 0.6% in May, which was slightly better than expected.  Overall, recent consumer spending trends have been favorable. 

Labor Markets
The June employment report showed that payrolls increased by 195,000 (better than the 161,000 consensus estimate).  The net revisions for job growth in April and May were +70,000.  Average nonfarm payroll growth over the past 3 months has been about 196,000.  Private payrolls increased 202,000 in June while government jobs fell 7,000.  The unemployment rate remained unchanged at 7.6% due to an increase in the labor force.  Overall, the jobs report was better than expected and job growth is showing positive momentum.

Housing Starts
Single-family housing starts rose slightly in May to 599,000 from 597,000 in April.  Housing permits eased 3.1% in the month after rising 12.9% in April.  Recent housing data has been mostly favorable.

 

Credit Spreads July 2013

Economic Data July 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and views constitute judgments or relevant information as of the date of writing and such information may become outdated or superseded at any time without notice.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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