U.S. economic news
Consumer spending shows signs of reboundRetailers reported faster-than-expected sales growth. According to Retail Metrics, same store sales climbed more than forecast. The International Council of Shopping Centers added to the upbeat retail news, reporting that chain store sales surged 9.0% in March, in line with the group's expectations of 8% to 10% growth. It was the fourth consecutive monthly gain, the largest since March 1999. The gain was boosted by an earlier Easter holiday, which accounted for about half the increase. The March increase was broad based, as most retailers met or topped estimates.
Recovery in service sector gains steam
The Institute for Supply Management reported that its index of nonmanufacturing activity rose to 55.4 in March, from 53 in February. A jump in new orders drove the gain. Anything over 50 represents expansion. The ISM also said 14 of its 18 sectors reported that business expanded in March.
Job losses rose last week, but trend still lower
Last week, initial jobless applications increased by a more-than-expected 18,000 to 460,000. The jump may be in part reflective of the difficulty in analyzing data ahead of the Easter holiday. Continuing claims in the prior week fell by the most this year, down 131,000 to 4.55 million, the fewest since December 2008, while the insured jobless rate ticked down 0.1 point to 3.5%, the lowest rate since January 2009. The four-week averages also continued to decline.
U.S. and global corporate news
Apple wages ad war; GM hit by 2H loss; Tiger appears in Nike ad; junk bond sales riseApple began a battle with Google this week by adding its own advertising system, the iAd network for the iPhone. The move challenges Google's core business model and its plans to expand into mobile devices.
General Motors incurred a $4.3 billion loss in the second half of 2009 as the company was hit by weak U.S. sales and began to repay government loans. These are the first official results posted by GM and come as the automaker disclosed the first official accounting of its balance sheets since the company emerged from bankruptcy protection in July.
Tiger Woods is appearing in a new Nike ad, the first new TV spot for the golfer since revelations of his multiple affairs emerged last year.
According to data compiled by Bloomberg, junk bonds are making up the biggest share of corporate debt sales on record as investors bet on an economic rebound. Global high-yield bond sales hit $91 billion this year, or 12% of total issuance, almost double last year's share.
Global economic news
Greece crisis sends yields higherOn Friday, French President Nicolas Sarkozy's assurances that European leaders had agreed on a plan to support Greece calmed financial markets. Earlier in the week, as worries grew about the country's ability to finance its heavy debt load, stocks sold off and Greek bond yields skyrocketed. On Thursday, the premium for Greek debt over German debt rose to its highest level since the euro's debut in 1999. Also on Thursday, news that Greece's four largest banks were tapping the $37 million of remaining government aid added to the jitters and sparked a new round of speculation on sovereign defaults.
European Central Bank (ECB) President Jean-Claude Trichet stemmed Thursday's global equity slide when he said he did not expect Greece to default. However, the higher rates will make it more difficult for the Greek government to fund the sale of 11.6 billion euros of debt by the end of next month. The country will put investors' willingness to the test on Tuesday when it offers a combined 1.2 billion euros of 26-week and 52-week U.S. Treasury bills.
ECB and BOE leave rates steady
The ECB opted to leave interest rates unchanged at a record low of 1% as the Greek fiscal crisis complicated its planned withdrawal of emergency stimulus measures. The Bank of England also left rates unchanged this week, given continued uncertainty about the outlook for the British economy.
Manufacturing rises globally
JPMorgan's All Industry Output Index, which is a proxy for global growth, rose strongly in March to 56.6 from 53.8 in February. This is the highest level of PMI output index since July 2007, when the global economy was still growing at a robust pace.
Stay focused and diversified
In any market environment, we strongly believe that investors should stay diversified across a variety of asset classes. By working closely with your financial advisor, you can help ensure that your portfolio is properly diversified and that your financial plan supports your long-term goals, time horizon, and tolerance for risk. Diversification does not guarantee a profit or protect against loss.
The views expressed here are those of MFS®and are subject to change at any time. These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any MFS investment product. Individual securities mentioned are for illustrative purposes only and may not be relied upon as investment advice or as an indication of trading intent on behalf of any MFS product.
Securities discussed may or may not be holdings in any of the MFS funds. For a complete list of holdings for any MFS portfolio, please see the most recent annual, semiannual, or quarterly report.
Past performance is no guarantee of future results.
Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; Financial Times; boston.com.
--see disclaimer below--
.bmp)
