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Weekly Market Update – February 20, 2015

Stocks rallied Friday afternoon after the announcement of a deal between European finance ministers and Greece to extend the country’s bailout.  The Dow gained 155 points to end the week 18,140, an all-time high.  For the week the Dow was up .7% and for the year it is now up 1.4%.

Talks in Brussels Friday yielded an agreement to extend Greece’s bailout by four months, conditional on the country’s commitment to particular budgetary and economic measures which will be submitted and examined on Monday.  The extension helps allay fears of default and a “Grexit”, as the current round of monetary aid to Greece was set to run out at the end of the month.       
 
Oil fell 2.1% Friday to close at $50.72, down 3.5% for the week.  Natural gas moved higher with the continued cold weather.  The yield on the 10-year Treasury rose 2 bps Friday to 2.13%, up 11 bps for the week but still down 4 bps for the year. Through Thursday, February 19, our trust preferred portfolios were up over 3%, on average, versus .55% for the Barclays Aggregate Bond Index. 

All signs from the Fed continue to indicate rates will begin to rise ‘mid-year’, though whether that means July, August or September is still up for debate.  Given the pace of the overall economic recovery, the economic “tightening” should occur at a gradual rate, meaning rates will remain relatively low for a lengthy period of time.  

Next week’s economic calendar highlights include January housing data on Monday and Wednesday, consumer confidence readings on Tuesday and Friday, January inflation data and weekly jobless claims on Thursday and a February manufacturing report on Friday.  Expect the housing data to show a slight decline in activity from December, consumer confidence to fall slightly from previous readings, inflation data to show a decline in prices from December, weekly jobless claims to settle in the 290,000 – 300,000 range (from 283,000 this week) and the manufacturing report to reflect a slight decline in activity from January. 

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Ulland Investment Advisors

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