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Weekly Market Update – March 27, 2015

The Dow broke a four-day losing streak Friday, climbing 34 points after falling over 400 points the previous four sessions.  For the week the Dow was down 2.3% and for the year the index is now down .6%.

Markets took a breather on Friday on what was a relatively calm day.  A consumer confidence report came in better than expected and the third and final estimate of Q4 GDP held steady at 2.2%, but neither had much effect on the day’s trading.  Fed Chairwoman Janet Yellen spoke late Friday afternoon and produced both dovish and hawkish remarks with respect to the impending interest rate increase.  Yellen stated that though the economy remains weak by historical standards and core inflation has not yet reached favorable levels, a rate increase may be warranted this year (as we know).  However, prolonged weakness in prices and wages could postpone the first rate hike in nine years.  Given those remarks, the consensus is that the Fed will begin to raise rates in sometime in early fall, perhaps September or October.  First quarter corporate earnings, which will begin to be announced in early April, will play a role in the Fed’s strategy as attention will be paid to what impact the strong dollar has had on earnings.

The yield on the 10-year Treasury fell 6 bps Friday to 1.95%, up 2 bps for the week and now down 22 bps for the year.  Through Thursday, March 26, our trust preferred portfolios were up approximately 2.5%, on average, versus 1.17 % for the Barclays Aggregate Bond Index. 

Next week, economic calendar highlights include a March manufacturing report and consumer confidence reading on Tuesday, weekly jobless claims on Thursday and the March jobs report on Friday.  Expect the manufacturing report to show an uptick in activity from February, consumer confidence to fall slightly, weekly jobless claims to settle in the 290,000 – 300,000 range (from 282,000 this week), and the jobs report to show 260,000 jobs created in March (down from 295,000 in February) and the unemployment rate to remain at 5.5%. 

Markets and our office will be closed next Friday, April 3, in observance of Good Friday.

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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