Finance Highlights 2007 0501 v2 - Laserfiche WebLink

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AprH 2001 MARKET REVIEW MARKET SUMMARY Bond yields were mixed during March, with yields on shorter maturities declining slightly while those on longer maturities rose. The bond market's recent fluctuations indicate that market participants remain uncertain about the future course of economic growth. Accordingly, each new economic release or FOMC pronouncement is being scrutinized even more closely than usual. The economy continued to display mixed signals in March. The Non-Farm Payroll number was unexpectedly strong, showing an increase of 180,000 new jobs, and the unemployment rate decreased to 4.4 percent. Both figures indicated that the job market remains relatively tight. Inflation readings also remained higher than the FOMC would prefer. On the other hand, housing data were mixed during the month, and there were fears that difficulties occurring in the subprime mortgage market might spread to traditional mortgages, thereby further depressing the housing sector. The FOMC took no action at its March 21st meeting, leaving its target for the fed funds rate at 5.25%. The accompanying statement was highlighted by language that indicated somewhat slower economic growth and slightly higher inflation. The next FOMC meeting is on May 9th, and most market participants anticipate no action on interest rates. 5.0- ~____ " --- 4.5- _ . MAR 07 . FEB 07 III MAR 06 = The treasury curve was mixed in March, as yields dedined for shorter maturities and rose for longer ones. YIELDS 3/31/07 2/28/07 Change 3 Month 5.03 5.12 (0.09) 2 Year 4.57 4.64 (0.07) 3 Year 4.53 4.56 (0.03) 5 Year 4.53 4.52 0.01 10 Year 4.64 4.57 0.07 30 Year 4.84 4.68 0.16 YIELD SPREADS 3/31/07 2/28/07 Change 5yr - 2yr T-Note 10yr - 2yr T-Note (0.04) 0.07 (0.12) (0.07) 0.08 0.14 Source: Bloomberg