Chandler Bond Market Review

Economic Roundup September 2013

Consumer Prices
In July, overall CPI inflation rose to 2.0% on a year-over-year basis from 1.8% in June. The year-over-year Core CPI (CPI less food and energy) rose slightly to 1.7% from 1.6%. The core inflation rate is still 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 July, Retail Sales rose 5.4% on a year-over-year basis. On a month-over-month basis, Retail Sales increased 0.2% in July which was slightly below the 0.3% consensus forecast. Overall, recent consumer spending trends have been healthy, but not robust. 

Labor Markets
The August employment report was disappointing as payrolls increased by 169,000 versus the 175,000 consensus estimate. The net revisions for job growth in June and July were -74,000. Average nonfarm payroll growth over the past three months has been about 148,000. Private payrolls increased 152,000 in August while government jobs rose 17,000. The unemployment rate declined to 7.3% from 7.4% due to a decline in the labor participation rate. Overall, the jobs report was lackluster.

Housing Starts
Single-family housing starts fell 2.2% in July to 591,000 from 604,000 in June. Meanwhile multifamily starts rose 24.8% in the month. Housing permits rose 2.7% in July. Recent housing data has been mixed, but mostly favorable.

Credit Spreads September 2013

 

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and views constitute judgments or relevant information as of the date of writing and such information may become outdated or superseded at any time without notice.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