Julex Market Weekly 03-23-2014 | US Stocks Continued Moving Higher Last Week

Top Stories Last Week

• US Stocks Moved Higher Last Week

US stocks moved higher while bonds declined as Fed signaled interest rate rises in 2015. Last week, S&P index rallied 1.3%, and MSCI EAFE index climbed 0.1%. The MSCI Emerging Market jumped by 1.7%. Gold tumbled 3.5%, and the SPGC commodity index dropped by 0.4%. The bond markets dropped as rates were higher. Barclays US Treasury index was lower by 0.9%, while US high yield bonds was up 0.2%.

• Russia Annexed Crimea and Traded Sanctions with US

Russian President Vladimir Putin signed a bill completing his country’s annexation of Crimea, a Black Sea peninsula which voted overwhelmingly less than a week earlier to secede from Ukraine and join the Russian Federation. The price for Russia’s takeover of Crimea has been a slowly increasing raft of sanctions from Washington and Europe targeting Russian officials. The stock market in Moscow took a beating Friday morning and international ratings agencies downgraded Russia’s outlook amid the threat of harsher sanctions — including possible broad economic sanctions against Russian institutions.

And in spite of an explicit promise to U.S. Defense Secretary Chuck Hagel from his counterpart in Moscow that Russia was not interested in going one step further and invading eastern Ukraine, the world remained on edge to see if that vow would be honored. Moscow made its first retaliatory shot on Thursday by banning nine U.S. officials and lawmakers from entering Russia, but Putin indicated that Russia would likely refrain from curtailing cooperation in areas such as Afghanistan.

• FOMC Met for the First Time under Chairwoman Janet Yellen

Federal Reserve Chairwoman Janet Yellen held her first news conference on Wednesday, announcing the central bank will decrease its monthly bond buying from $65 billion to $55 billion, while holding interest rates at near zero. The Fed previously took the stance since late 2012 that interest rates would likely remain near zero percent until the unemployment rate dropped below 6.5 percent. Inflation will likely move “gradually” back to the bank’s goal of 2 percent. Raising interest rates is becoming more attractive at the Fed as the economy improves compared with December. The Fed could raise interest rates above 1 percent by the end of 2015. The Fed will continue adding to its holdings during tapering. Beginning in April the Fed will add agency mortgage-backed securities at a decreased pace of $25 billion per month rather than $30 billion per month, and will add $30 billion longer-term Treasury securities each month rather than $35 billion per month.

• Euro Zone Inflation Remained Well below ECB Target

Consumer price inflation in the euro zone rose less than initially estimated in February, underlining concerns over the threat of deflation in the region, official data showed on Monday. In a report, Eurostat said consumer price inflation rose by a seasonally adjusted 0.7% last month, down from a preliminary estimate of 0.8%. Euro zone inflation rose by 0.8% in January. The rate remains firmly below the European Central Bank’s target of near but just below 2%. Month-over-month, consumer prices inched up 0.3% last month, below expectations for a gain of 0.4% and following a decline of 1.1% in January. Core CPI, which excludes food, energy, alcohol, and tobacco costs rose by a seasonally adjusted 1% in February, unchanged from an initial estimate and unchanged from January.

Top Stories to Watch This Week

• US Durable Goods Orders

US durable goods orders may have risen by 1.1% in February.

• German Consumer Price Index

German Consumer Price Index is expected to rise by 1.1% YOY in March.

• Japanese Consumer Price Index

Japanese Consumer Price Index is likely to increase by 1.3% YOY in March.