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Weekly Market Update – June 12, 2015

Stalled Greek debt talks and nervousness ahead of the Fed’s policy meeting next week sent markets lower Friday.  The Dow fell 141 points ending the week up .3%.  For the year the index is now up .4%.

European officials on Friday began their first formal talks on a worst-case-scenario outcome for Greece and its ongoing debt troubles, one day after the IMF halted discussions with Greek representatives citing “major differences”.  Greece is expected to deliver a 1.5 billion euro payment to the IMF by the end of the month, the completion of which looks unlikely at present time.  The specter of default contributed to Friday’s selloff in both the US and Europe, where markets in France and Germany fell more than 1%.

In the US, a report released Friday showing a rise in consumer confidence failed to catalyze markets as buying activity waned in advance of the Fed’s Open Market Committee meeting next Wednesday.  Further clues as to the timing of the Fed’s impending interest rate hike hope to be gleaned from the meeting and related statements.  The prevailing thought is that the first rate increase will be announced at the September meeting.

The yield on the 10-year Treasury held steady Friday at 2.38%, down 2 bps for the week and now up 21 bps for the year.  Through Thursday, June 11, our trust preferred portfolios were up approximately 3%, on average, versus -.28 % for the Barclays Aggregate Bond Index.  Magnum Hunter has been weak in advance of an announcement scheduled for June 19 about its effort to raise capital. 

Oil fell 1.3% to $59.98 Friday due to a stronger dollar and oversupply concerns.  On Thursday, the International Energy Agency said demand for oil was stronger than anticipated in the first quarter of 2015, but production in the US (and most other countries, including those in OPEC) remains steady, having yet to realize a reduction even though the number of rigs in operation has decreased by 60%.  May should show a fall in production when supply figures are announced. 

Next week’s economic calendar highlights include May industrial production (factory output) on Monday and weekly jobless claims and May inflation data on Thursday.  Expect factory output to increase from April, weekly jobless claims to again settle in the 270,000 – 280,000 range (from 279,000 this week) and the inflation data to show a slight increase in prices from April.

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Ulland Investment Advisors

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