However, a strong if somewhat inexplicable fi nish, saw the S&P 500 inch to new highs on both Thursday and Friday, while the Dow climbed within 16 points of its all-time record.

Yet again, much of the week was taken up with news about Greece. As expected, the Greeks were able to make a debt payment of €757 million to the International Monetary Fund. Analysts doubt Greece will have the money to make upcoming payments, unless it gets the last bailout tranche of €7.2 billion by the end of the summer. Greece must pay almost €12 billion. The Greeks are reportedly angling for either a delay or having some of their debt forgiven, but both options seem to be longshots. Tensions are rising once more after Finance Minister Yanis Varoufakis said that the “soul” of Mario Draghi, the president of the European Central Bank, was “fi lled with fear” over the prospect of giving Greece a break on its debt payments because he was worried what Germany would do. Then on Friday, speaking in Athens, Prime Minister Alexis Tsipras said that while he wanted to come to terms with the troika, he would not take the further austerity steps demanded by creditors: “I want to reassure the Greek people that there is no possibility or chance that the Greek government will back down on pension and labor issues.”

Sales fall, stocks soarFor the fi rst four days of last week, stocks were mostly down while the yield on the 10-year Treasury rose to its highest

level in 2015 at 2.29%. Then on Friday, the government announced that retail sales were fl at in April (an increase of 0.2% had been forecast) from the month before, as were core retail sales, less gas, cars, building materials and food services. That was not the only tepid report of the day – the Federal Reserve said that industrial production declined for the fi fth month in a row in April, down 0.3%. In addition, the preliminary University of Michigan Consumer Sentiment Index for May came in at 88.6, down from 95.9 in April. Plus

the fate of Greece and the state of the United States economy, the major stock indexes were volatile again last week.

With more mixed news about the

MARKET COMMENTARYFOR THE WEEK OF MAY 18, 2015

Key Market DataWeek ending… 5/8/2015 5/15/2015 Change

S&P 500 Index 2,116.10 2,122.73 +0.31%

MSCI EAFE Index 1,925.44 1,949.49 +1.25%

BarCap U.S. Aggregate Bond Index

1,930.66 1,931.33 +0.03%

10-year Treasury Note Rate

2.148% 2.141% -0.7 basis pts.

Trending

• Jobless claims hit a 15-year low.

• Russia’s GDP contracts 1.9% in Q1.

• The PPI falls 1.3% from a year earlier.

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the Producer Price Index (PPI) fell 0.4% in April, which is the third time this year it has dropped. Core prices, less food and energy, dropped 0.2%, and over the last year the PPI fell 1.3%, the biggest year-over-year decline since 2010, while core prices were up just 0.8%. Still, perhaps because the weak news meant that the Fed might wait longer to pull the trigger on raising its benchmark rate, the indexes soared on Friday, with the Dow gaining 191.75 points and the S&P 500 setting a record for the second day in a row.

Growth in the eurozone picks upThere was one positive report on Friday, however, as Eurostat said that gross domestic product (GDP) for the eurozone grew 1.6% in the fi rst quarter, with France surprising on the upside as its economy expanded 0.6%, its best showing in almost two years. However, the GDP of two member nations, Greece and Finland, contracted for the second quarter in a row, the yardstick for a recession. Greece has been hamstrung by debt payments, and Finland by its close trade relationship with Russia.

Speaking of Russia, it reported that GDP contracted 1.9% in the fi rst quarter, less than expected, as Russia appears to be recovering from the double-whammy of trade sanctions and low energy prices. Ukraine, still locked in confl ict, did not fare nearly as well, with GDP for the fi rst three months of 2015 tumbling 17.6% from a year earlier.

Across the Channel, the Bank of England (BOE) left its interest rate unchanged at 0.5%, where it has remained since March 2009. The BOE also lowered its growth estimate for 2015 from 2.9% to 2.5%, while saying that infl ation will hit 2% within the next two years, giving it some fl exibility to not raise interest rates until perhaps the middle of next year.

MARKET COMMENTARY FOR THE WEEK OF MAY 18, 2015

The trade pact dramaIn Washington, President Obama continued to battle his own party over the proposed Trans-Pacifi c Partnership. Early last week, the democrats in the Senate voted against allowing a fast-track version of the bill, which can’t be amended before it comes to a vote. After some negotiating, a second round of voting moved consideration of the bill forward, but the Senate democrats are still expected to vote against it when it comes back as a bill.

Jobless claims at 15-year low, againIn other news, fi rst-time jobless claims fell 1,000 to 264,000, while the four-week average dipped 7,750 to 271,750, its lowest level since April 2000. The Treasury Department said that the April budget surplus was $156.7 billion compared to $106.9 billion a year earlier, the largest surplus since April 2008, as receipts totaled a record $471.8 billion. The National Federation of Independent Business announced that its Small Business Confi dence Index was up 1.7 points in April to 96.9, the biggest rise since December. Plus, 60% of the companies reported capital outlays, the highest total since the recession ended. The government said that business inventories rose 0.1% in March compared to an increase of 0.2% in February. Lastly, Verizon agreed to buy AOL for $4.4 billion, in part to acquire AOL’s mobile video and advertising technology.

A look aheadThis week’s releases will include the latest on building permits and housing starts, existing home sales, the Consumer Price Index and Markit’s Manufacturing PMI. The Fed will also release the minutes of its meeting on April 28 and 29.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee,

WI (NM) (life and disability insurance, annuities) and its subsidiaries. Northwestern Mutual Wealth Management

Company®, Milwaukee, WI, (investment management, trust services, and fee-based fi nancial planning) subsidiary

of NM, limited purpose federal savings bank. Northwestern Mutual Investment Services, LLC, (securities)

subsidiary of NM, broker-dealer, registered investment adviser, member FINRA and SIPC.

The opinions expressed are those of Northwestern Mutual as of the date stated on this report and are subject

to change. There is no guarantee that the forecasts made will come to pass. This material does not constitute

investment advice and is not intended as an endorsement of any specifi c investment or security. Information and

opinions are derived from proprietary and non-proprietary sources. Sources may include Bloomberg, Morningstar,

FactSet and Standard & Poor’s.

Please remember that all investments carry some level of risk, including the potential loss of principal invested.

Indexes and/or benchmarks are unmanaged and cannot be invested in directly. Returns represent past

performance, are not a guarantee of future performance and are not indicative of any specifi c investment.

Diversifi cation and strategic asset allocation do not assure profi t or protect against loss. Although stocks have

historically outperformed bonds, they also have historically been more volatile. Investors should carefully consider

their ability to invest during volatile periods in the market. The securities of small capitalization companies are

subject to higher volatility than larger, more established companies and may be less liquid. With fi xed income

securities, such as bonds, interest rates and bond prices tend to move in opposite directions. When interest rates

fall, bond prices typically rise and conversely when interest rates rise, bond prices typically fall. This also holds true

for bond mutual funds. When interest rates are at low levels there is risk that a sustained rise in interest rates may

cause losses to the price of bonds or market value of bond funds that you own. At maturity, however, the issuer

of the bond is obligated to return the principal to the investor. The longer the maturity of a bond or of bonds held

in a bond fund, the greater the degree of a price or market value change resulting from a change in interest rates

(also known as duration risk). Bond funds continuously replace the bonds they hold as they mature and thus do not

usually have maturity dates, and are not obligated to return the investor’s principal. Additionally, high yield bonds

MARKET COMMENTARY FOR THE WEEK OF MAY 18, 2015

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and bond funds that invest in high yield bonds present greater credit risk than investment grade bonds. Bond and

bond fund investors should carefully consider risks such as: interest rate risk, credit risk, liquidity risk and infl ation risk

before investing in a particular bond or bond fund.

All index references and performance calculations are based on information provided through Bloomberg. Bloomberg

is a provider of real-time and archived fi nancial and market data, pricing, trading, analytics and news.

Standard and Poor’s 500 Index® (S&P 500®) is a capitalization-weighted index of 500 stocks. The index is designed to

measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks

representing all major industries.

Standard & Poor’s off ers sector indices on the S&P 500 based upon the Global Industry Classifi cation Standard (GICS®).

This standard is jointly maintained by Standard & Poor’s and MSCI. Each stock is classifi ed into one of 10 sectors, 24

industry groups, 67 industries and 147 sub-industries according to their largest source of revenue. Standard & Poor’s

and MSCI jointly determine all classifi cations. The 10 sectors are Consumer Discretionary, Consumer Staples, Energy,

Financials, Health Care, Industrials, Information Technology, Materials, Telecommunication Services and Utilities.

The MSCI EAFE Index measure international equity performance. It comprises the MSCI country indices that represent

developed markets outside of North America: Europe, Australasia and the Far East.

Barclays Capital US Aggregate Bond Index is a benchmark index composed of US securities in Treasury, Government-

Related, Corporate, and Securitized sectors. It includes securities that are of investment-grade quality or better, have

at least one year to maturity, and have an outstanding par value of at least $250 million.

The 10-year Treasury Note Rate is the yield on U.S. Government-issued 10-year debt.

The International Monetary Fund (IMF) is the intergovernmental organization that oversees the global fi nancial

system by following the macroeconomic policies of its member countries, in particular those with an impact on

exchange rate and the balance of payments.

The European Central Bank (ECB) is the institution of the European Union (EU) which administers the monetary

policy of the 17 EU eurozone member states.

The University of Michigan Consumer Sentiment Index is a consumer confi dence index published monthly by the

University of Michigan and Thomson Reuters. At least 500 telephone interviews are conducted each month of a

United States sample. 50 core questions are asked.

The U.S. Department of Labor Producer Price Index (PPI) program measures the average change over time in the

selling prices received by domestic producers for their output. The prices included in the PPI are from the fi rst

commercial transaction for many products and some services.

Directorate-General of the European Commission located in Luxembourg. Its main responsibilities are to provide

statistical information to the institutions of the European Union (EU) and to promote the harmonization of

statistical methods across its member states and candidates for accession as well as EFTA countries.

The troika is a term for the three organizations which have the most power over Greece’s fi nancial future as

defi ned within the European Union. The three groups are the European Commission (EC), the International

Monetary Fund (IMF) and the European Central Bank (ECB).

The National Federation of Independent Business is a small business association representing small and

independent businesses. A nonprofi t, nonpartisan organization founded in 1943, NFIB represents the consensus

views of its members in Washington and all 50 state capitals.

The Markit Purchasing Managers’ Indices are monthly economic surveys of selected companies. They provide

insight into the private sector economy by tracking variables such as output, new orders, employment and prices

across key sectors.