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Weekly Market Update – August 7, 2015

The Dow fell 46 points Friday on the heels of the July jobs report and a further decline in oil prices.  For the week the Dow was down 1.8% and for the year the index is now down 2.6%.

The July jobs report showed the addition of 215,000 jobs in the month, slightly below expectations and June’s 231,000 number, which was upwardly revised.  The unemployment rate remained unchanged at 5.3% while hourly earnings rose .2% year-over-year.  Monthly job growth has averaged just over 211,000 this year, a pace which continues to favor the odds of an interest rate hike by the Fed later in the year, most likely in September.  The Fed’s next policy meeting is September 16 & 17.

The yield on the 10-year Treasury fell 6 basis points Friday to 2.17%, down 4 bps for the week and now flat for the year.  Through Thursday, August 6, our trust preferred portfolios were up approximately 1.75%, on average, year-to-date, versus .42% for the Barclays Aggregate Bond Index. 

Oil fell 79 cents to $43.87 Friday, closing below $44 for the first time since March and near its six-year closing low of $43.46.  Pressuring oil was the latest rig count report which showed the addition of 6 drilling rigs this week.  The rise of the dollar after the US jobs report was released and continued concerns about additional Iranian oil flooding the market also weighed on pricing.  

Next week’s economic calendar highlights include weekly jobless claims and July retail sales on Thursday and inflation, July manufacturing and consumer confidence reports on Friday.  Expect weekly jobless claims to fall in the 270-280,000 range (from 273,000 this week), July retail sales to be slightly stronger than in June, inflation to remain in check, the manufacturing report to show an uptick in activity from June and consumer confidence to fall slightly.

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Ulland Investment Advisors

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