May 26, 2017Market Commentaryby Scott J. Brown, Ph.D., Chief EconomistThe economic data were not especially market-moving. The estimate of first quarter GDP growth was revised to a 1.2% annual rate (from +0.7%), higher than expected (but well within the usual range of noise in these data). Consumer spending was revised higher (still slow). Business fixed investment was revised to an even stronger pace – however, the soft report on durable goods orders suggests that such strength may be fleeting. Home sales figures for April were on the soft side of expectations, reflecting some seasonal shift (due to earlier mild weather and the late Easter) and the usual statistical noise. The University of Michigan’s Consumer Sentiment Index was little changed in May, near the average of the last five months – however, the report noted that most Republicans are expecting robust economic growth, while most Democrats are anticipating a recession. President Trump was out of the country. The White House’s Office of Management and Budget unveiled its budget proposal (more of a wish list, as Congress writes the laws), which had some notable arithmetic errors (double-counting some $2 trillion in tax revenues). Up next, there are important economic reports in the holiday-shortened week. While the Fed isn’t going to react to any one piece of economic data, the May employment report is seen as the last major hurdle ahead of the Fed’s June 13-14 policy meeting (current market odds of a 25-bp hike in June are at 80%). The markets could react to surprises in the ISM manufacturing survey or in the consumer confidence data, but a lot of weight falls on the May job market figures. Nonfarm payrolls are expected to have risen moderately, with the unemployment rate likely steady (at 4.4%). Indices LastLast WeekYTD return %DJIA21082.9520663.026.68%NASDAQ6205.266055.1315.27%S&P 5002415.072365.727.87%MSCI EAFE1892.431868.7512.38%Russell 20001383.391361.081.93% Consumer Money Rates Last1 year agoPrime Rate4.003.50Fed Funds0.910.3730-year mortgage4.033.72 Currencies Last1 year agoDollars per British Pound1.2941.467Dollars per Euro1.1211.119Japanese Yen per Dollar111.84109.76Canadian Dollars per Dollar1.3451.302Mexican Peso per Dollar18.50318.454 Commodities Last1 year agoCrude Oil49.9049.48Gold1259.801222.70 Bond Rates Last1 month ago2-year treasury1.291.2810-year treasury2.232.2510-year municipal (TEY)3.023.32 Treasury Yield Curve – 05/26/2017 As of close of business 05/25/2017 S&P Sector Performance (YTD) – 05/26/2017 As of close of business 05/25/2017 Economic CalendarMay 29 — Memorial Day (markets closed)May 30 — Personal Income and Spending (April) — CB Consumer Confidence (May)May 31 — Chicago Purchasing Managers Index (May) — Pending Home Sales Index (April) — Fed Beige BookJune 1 — ADP Payroll Estimate (May) — Jobless Claims (week ending May 27) — ISM Manufacturing Index (May) — Motor Vehicle Sales (May)June 2 — Employment Report (May) — Trade Balance (April)June 14 — FOMC Policy Decision (Yellen press conference)July 4 — Independence Day holiday (markets closed)July 7 — Employment Report (June)July 26 — FOMC Policy Decision (no Yellen press conference)September 20 — FOMC Policy Decision (Yellen press conference) All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. 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The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business May 25, 2017. ©2017 Raymond James & Associates, Inc. member New York Stock Exchange / SIPC.