The Markets

A surprise move by Switzerland’s central bank made already unsettled financial markets even more volatile. For the third straight week of 2015, equities saw strong ups and downs that resulted in losses for the week. The uncertainty drove the benchmark 10-year U.S. Treasury yield even further below 2% as demand for a safe haven sent prices higher.

Market/Index	2014 Close	Prior Week	As of 1/16	Weekly Change	YTD Change
DJIA	17823.07	17737.37	17511.57	-1.27%	-1.75%
Nasdaq	4736.05	4704.07	4634.38	-1.48%	-2.15%
S&P 500	2058.90	2044.81	2019.42	-1.24%	-1.92%
Russell 2000	1204.70	1185.68	1176.65	-.76%	-2.33%
Global Dow	2501.66	2459.59	2447.65	-.49%	-2.16%
Fed. Funds	.25%	.25%	.25%	0%	0%
10-year Treasuries	2.17%	1.98%	1.83%	-15 bps	-34 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Headlines

• The Swiss National Bank shocked financial markets by deciding not to maintain a cap on the amount the Swiss franc can rise against the common eurozone currency. As a result, both the euro and shares of Swiss companies were hard-hit in the wake of the decision, which was made in anticipation of further weakening of the euro once the European Central Bank meets next week. In other central bank actions, India cut its key interest rate by 25 basis points to 7.75%; it was the first cut in almost two years and is intended to help spur growth.
• The largest monthly decline in U.S. consumer energy costs since December 2008, which included a 9.4% drop in gas prices, was largely responsible for cutting the Consumer Price Index by 0.4% in December. The Bureau of Labor Statistics said that means consumer prices overall have increased only 0.8% over the last 12 months; that’s sharply lower than the 1.3% annual rate recorded in November. Higher costs for shelter and medical care were offset by declines in not only energy but also clothing, air fares, vehicles, and household furnishings.
• The plunging cost of oil also helped cut wholesale prices 0.3% in December, according to the Bureau of Labor Statistics. The decline–the fourth in the last five months–was the sharpest drop in more than 3 years. December’s figure left the wholesale inflation rate for the last 12 months at 1.1%; however, excluding food and energy, the 12-month increase in wholesale prices was 2.1%.
• Early holiday shopping may have helped cut December’s retail sales by 0.9% in the wake of a strong November. The Commerce Department said December’s decline was the largest since January 2014.
• Warmer than usual temperatures in some parts of the United States in December led to reduced production by utilities, which contributed to a 1% decline in the nation’s industrial production. However, the Federal Reserve Board said that aside from utilities, industrial production rose 0.7%. The Fed’s Empire State manufacturing survey showed stronger growth than in November, while its Philly Fed survey showed slower growth.
• Exports from China increased 9.7% in December, according to the country’s General Administration of Customs. Investors took that as an encouraging sign for the global economy as a whole.
• The Federal Reserve’s Beige Book report showed that the U.S. economy continued to expand at a moderate pace in December, with consumer spending increasing in most of the Fed’s 12 districts.

Eye on the Week Ahead

Europe is likely to dominate the coming week’s news. Investors are hoping for additional stimulus measures from the European Central Bank, and will be watching polls in Greece to see if anti-bailout forces are likely to make gains in Sunday’s parliamentary election. Those results could affect the country’s willingness to go along with conditions imposed by its creditors after bailouts in 2011 and 2013, and could prompt fresh concerns about a “Grexit” from the eurozone.