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Weekly Market Update – July 8, 2016

The Dow finished 251 points higher on Friday as the far-better-than-expected June U.S. Jobs Report alleviated some concerns of an economic slowdown. For the week the Dow was up 1.1%. Year-to-date the index is up 4.1%.

Domestic economic data were largely positive for the week. Nonfarm payrolls rose by 287,000 vs. consensus estimate of 165,000, making June the strongest month of hiring since last October and providing reassurance of continued economic growth in the U.S. despite recent global uncertainties. Markit’s US services PMI rose slightly to 51.4 in June from 51.3 in May. June ISM Services Index recorded the biggest sequential increase since 2008, suggesting strong business activities. Initial jobless claims dropped to 254,000 and June ADP employment came in at 172,000, both numbers better than consensus estimates.

Earlier this week, a number of Federal Reserve officials commented that it was too early to estimate the impact of Brexit on the U.S. economy. The Federal Open Market Committee (FOMC) Minutes on Tuesday highlighted the financial market turbulence following the Brexit vote and judged it appropriate to leave policy options open and remain dependent on economic data. The strong jobs report increases the possibility of an interest rate hike later this year. For the week the US Preferred stock index was down 0.20% and the U.S. 10 Year Treasury yield dropped by 8 basis points to 1.36%. Our preferreds did quite well, and the interest rate environment and slow economic growth should allow more favorable conditions to continue.

U.S. crude oil inventories and production continue to drop which is expected to close the supply and demand gap later this year. The warm summer and the ongoing conversion of coal electric utility plants to natural gas are reducing high natural gas inventories as well.

Next week’s economic calendar highlights include Crude Inventories (July 13th), Initial Jobless Claims and Producer Price Index (July 14th), and Consumer Price Index (July 15th).

Have a great weekend,

Yansong Pang (庞岩松)


Ulland Investment Advisors

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