Finance Highlights 2007 0320 v1 - Laserfiche WebLink

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January 2007 MARKET REVIEW MARKET SUMMARY The FOM C took no action at its December 12th meeting, leaving Its target for the fed funds rate at 5.25ro. In its accompanying statement, the FOMC noted that "economic growth has slowed over the cou rse of the year," and that the housing market had expenenced "substantial cooling." The FOMC went on to say that "going forward, the economy seems likely to expand at a moderate pace." The next FOMC meeting is on January 31 s1. and most market participants anticipate no action on interest rates. The economy continued to display moderate growth In December. The Non- Farm Payroll number was stronger than expected, With the economy adding 167,000 new jobs. There were some tentative signs that the hOUSing decline may have begun to moderate, and the manufacturing sector also rebounded, as the ISM Manufacturing Index roseto 51.4 from 49.5 in November. ISM readings above 50 indicate that the manufacturing sector of the economy is In an expansionary phase; readings below 50 indicate that the manufacturing sector is contracting. Inflation data was mixed last month, but Core CPI did moderate Going forward, market participants will continue to focus upon inflation readings, while also searching for signs as to whether or not the economy IS Indeed growing at a moderate pace. I 15.5- ! l I 150_~ !4.5- I I 4.0- I I I I v I , j l I I i I I . DEC 06 Ii! NOV 06 DEC 05 Bond yields rose throughout December. closing the month more than 20 basis points higher across mostofthe treasury curve. 3 Month 5.01 5.02 (001) 2 Year 481 4.61 0.20 3 Year 4.73 4.50 0.23 5 Year 4.69 4.44 0.25 10 Year 4.70 4.46 0.24 30 Year 481 456 0.25 5yr - 2yr T-Note 10yr - 2yr T-Note (0.17) (0.15) 0.05 0.04 (0 12) (0.11) Source: Bloomberg