Presented by Mark Gallagher

General market news
• The 10-year Treasury yield opened this Monday morning at 2.33 percent, down from last week’s high of 2.46 percent on Tuesday, which decreased steadily as the week went on. The 30-year yield also opened lower this week, at 2.96 percent.
• Equity markets continued their push higher, with the S&P 500 and Dow Jones Industrial Average posting gains of 0.73 percent and 0.99 percent, respectively. The Nasdaq Composite Index lagged, moving up by just 0.13 percent as weakness in the technology and biotech segments suppressed gains. Positive earnings reports from Home Depot and Walmart helped boost the consumer discretionary sector at a time when brick-and-mortar stores have mostly struggled. Bond proxy sectors such as utilities, telecom, and real estate led the way last week, as a risk-off trade drove a dip in the Russell 2000.
• Last week was quiet in terms of economic data, though January housing data came into focus. Existing home sales began 2017 on a good note, increasing 3.3 percent in January, with single-family home and condo sales particularly strong. Supply continues to be thin, but prices were slightly lower for the first month of the year. Although new home sales didn’t look as strong, that report tends to be quite volatile.
• Released on Wednesday, the minutes from the Federal Reserve’s recent meeting indicated that multiple policymakers have suggested hiking rates “fairly soon.” How soon that will be remains to be seen, with the probability of a March rate increase currently at just over 40 percent.

Source: Bloomberg

Source: Morningstar Direct

What to look forward to
We anticipate several important economic data releases this week, including January Durable Goods Orders, the second estimate of Gross Domestic Product for the fourth quarter of 2016, and Personal Income and Outlays numbers.

The week will wrap up with February readings of the ISM Manufacturing and Non-Manufacturing indices, which are expected to have been fairly flat.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2017 Commonwealth Financial Network®

Presented by Mark Gallagher

General market news
• The 10-year Treasury yield opened this Tuesday morning at 2.44 percent, down from a high of 2.51 percent last week. The 30-year yield began the week at 3.04 percent, also down from last week’s high of 3.10 percent.
• Markets moved higher last week, with the S&P 500 Index gaining 1.60 percent and both the Nasdaq Composite and Dow Jones Industrial Average posting gains of 1.88 percent. The upward move came as a result of strong economic data, particularly in the retail and manufacturing spaces. January retail sales rose 0.4 percent, and December sales were revised up. In other positive news, the Philadelphia Fed’s manufacturing index hit a 33-year high. The financial, health care, and technology sectors led the way last week, with energy, telecom, and real estate lagging.
• In light of recent improvements in the economy, Federal Reserve Chair Janet Yellen took a more hawkish tone last week in remarks to the Senate Banking Committee, stating that it would be risky to wait too long to raise rates. Her comments have increased expectations for a rate hike in the first half of the year.
• January inflation data was released last week, and prices showed some upward pressure. The headline Producer Price Index rose 0.6 percent in January, driven by a surge in energy costs, with core prices up 0.4 percent. Perhaps more significant, the Consumer Price Index was up more than expected, increasing 0.6 percent at the headline level in January, with core prices up 0.3 percent. Energy skewed consumer prices higher, and gains were seen in apparel, housing, and medical care.

Source: Bloomberg

Source: Morningstar Direct

What to look forward to
We’ll see a handful of economic news releases in this holiday-shortened week.

The focus will be housing data, with releases of Existing and New Home Sales for January. Both measures are expected to show improvement.

We will also see the latest Federal Open Market Committee meeting minutes.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.
Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.
Authored by the Investment Research team at Commonwealth Financial Network.

© 2017 Commonwealth Financial Network®

Presented by Mark Gallagher

General market news
• The 10-year Treasury yield dropped as low as 2.32 percent last Wednesday, a level it’s touched twice since November. It opened at 2.42 percent early this Monday morning, after a sell-off late last week. The 30-year yield was once again below 3 percent last week and opened Monday around that same level.
• Markets moved higher last week, with the S&P 500 and Nasdaq Composite indices posting gains of 0.87 percent and 1.24 percent, respectively. The first three days of the week were mostly flat, but President Trump’s statement about plans to reduce the tax burden on American business pushed markets higher on Thursday. Friday brought news on international policy, with Trump stating in a call with Chinese President Xi Jinping that his administration would respect the “One China” policy, indicating a softer stance on U.S.-China relations moving forward. The industrial, consumer discretionary, and technology sectors led the way last week, with energy, materials, and telecom lagging.
• In a quiet week for the economy, the international trade deficit was shown to have narrowed slightly in December. Exports were strong during the month, increasing by 2.7 percent and outweighing imports. Both imports and exports posted solid monthly gains, suggesting improved demand. In other news, consumer sentiment fell back in its preliminary February reading but remains at high levels. The decline is centered in the expectations component, as inflation expectations have picked up. Overall, the report suggested some division in confidence levels between Democrats and Republicans, with confidence among Democrats near all-time lows since the election. This gap, however, is likely to moderate over time.

Source: Bloomberg

Source: Morningstar Direct

What to look forward to
We will see several January data releases this week, with the focus first turning to inflation and the Consumer and Producer Price indices.

The week will continue with Retail Sales, expected to have been stronger (excluding autos) in January, and Industrial Production, expected to have been flat.

Finally, data on Housing Starts and building permits will be released.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.
Authored by the Investment Research team at Commonwealth Financial Network.

© 2017 Commonwealth Financial Network®

Presented by Mark Gallagher

General market news
• The 10-year Treasury yield opened at 2.41 percent this Monday morning, its lowest level in more than two weeks. It has tested 2.50 percent a few times in that same span, twice last week alone. The 30-year yield opened at 3.04 percent, closer to the bottom of its recent range and down from 3.12 percent late last week.
• Markets were mostly flat last week, with the S&P 500 and Nasdaq Composite indices posting gains of 0.16 percent and 0.13 percent, respectively. The top-performing sectors were health care and consumer staples; the worst-performing sectors included industrials, materials, and telecom.
• U.S. stocks began the week with the worst daily performance of early 2017 as Donald Trump’s new restrictions on immigration and proposed border adjustments prompted concerns for technology companies and others. Late in the week, however, a push toward deregulation—with the administration calling for a review of the Dodd-Frank Act, the Volcker Rule, and the Department of Labor’s fiduciary rule—helped financials and markets rally.
• Last week’s economic data was mostly positive. Personal income rose 0.3 percent in December, and consumer spending was up a solid 0.5 percent. The ISM Manufacturing report for January showed a strong 1.5-point gain, suggesting continued recovery in U.S. manufacturing. The Federal Reserve kept its policy rate unchanged, describing economic activity as moderate. It is expected to raise rates three times this year but may wait for more clarity on the direction of fiscal stimulus before making its next move. The January employment report was mostly positive, with payrolls rising more than expected and the trade, retail, and transportation sectors showing strength. An increase in the labor force and participation rate drove unemployment up very slightly to 4.8 percent.

Source: Bloomberg

Source: Morningstar Direct

What to look forward to
This week will be quiet, featuring news about International Trade and Consumer Sentiment.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.
Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2017 Commonwealth Financial Network®