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Weekly Market Update – July 1, 2016

The Dow finished 19 points higher on Friday as the 10-Year U.S. Treasury yield reached a near historic low. For the week the Dow was up 3.1%, nearly erasing last Friday’s loss following the “Brexit”. Year-to-date the index is up 3%.

Britain splitting from the European Union, the “Brexit”, continued to be the market headline this week. Equities rallied after the market’s initial selloff with hopes of softening terms for the exit. The European Central Bank and the Bank of England provided reassurance. The European Central Bank Vice President Vitor Constancio said that a European recession is unlikely. However, concerns and uncertainties surrounding Brexit are not likely to be resolved any time soon.

Domestic economic data were generally positive for the week. Q1 real GDP was revised up to 1.1% from 0.8% previously. June’s consumer confidence came in better than expected at 98. Weekly jobless claims rose 10,000 to 268,000, in line with expectations. However, employment contracted at its fastest pace since 2009, suggesting an aging U.S. population. The Chicago Purchasing Managers’ Index, a measure of the manufacturing sector’s health, jumped to 56.8, with forward-looking new orders improving to its best level since October 2014.

U.S. bond yield continued to fall as investors are increasingly concerned with soft global growth and low inflation. Federal Reserve Governor Powell is pessimistic on interest rate hikes and commented that monetary policy needs to remain supportive of growth given refreshed downside risk after “Brexit”. For the week the US Preferred stock index was up 0.9% and the U.S. 10 Year Treasury yield dropped by 11 basis points to 1.45%. Our preferreds did quite well.

Our office and the market will be closed Monday, July 4th in observance of Independence Day. Next week’s economic calendar highlights include Federal Open Market Committee (FOMC) Minutes (July 5th), Initial Jobless Claims (July 7th) and Non-farm Payrolls (July 8th), which will be the most important news of the week.

Have a great weekend,

Natalie Do

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Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464