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Weekly Market Update – March 4, 2016

The Dow gained 63 points on Friday on the heels of a strong February employment report. For the week the Dow was up 2.2% and for the year the index narrowed its losses to 2.4%.

Equities in cyclical sectors outperformed the market, including financials, energy and materials as commodity prices rebounded. Oil prices moved up from $33 to $36 per barrel during the week after news of another decline in the US rig count, continued optimism regarding a potential output freeze, and short covering. The buying sentiment for the week follows a 50 basis point cut in the bank reserve requirement ratio by the Chinese Central Bank, a low inflation reading in Europe leading to expectations of continued low interest rates, and speculation about more Japan stimulus.

In the US, payrolls rose 242,000 last month versus consensus estimates for 195,000, and the labor force participation rate also improved. The ISM manufacturing index and construction spending both surprised to the upside, and auto sales came in higher than estimates. Strong economic data pushed up the odds of another interest rate hike at the upcoming Fed meeting in March, leading 10 year Treasury yields to rise over 10 basis points to 1.87%.

Preferred securities in portfolios continued to recover from the early February European bank nervousness. We expect this recovery to continue until prices return to January levels. We are starting to add some preferred that have a floating rate return that will provide some inflation protection, should it occur.

Next week’s economic calendar highlights include the European Central Bank policy meeting and jobless claims on Thursday (Mar 10).

Have a nice weekend,

Natalie Do


Ulland Investment Advisors

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