Finance Highlights 2007 0501 v2 - Laserfiche WebLink

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. ' ECONOMIC ROUNDUP ca I CHANDLER I ASSET '~MENT CONSUMER AND PRODUCER PRICES During February, the economy's headline inflation reading rose as the year-over-year C PI increased to 2.4 % from 2.1 % in January, partly due to an increase in food and beverage prices. The year-over-year Core CPI (CPI less food and energy) remained unchanged at 2.7%. Core CPI remains above the FeMC's comfort level. Going forward, market observers will watch carefully to see if there is a trend towards higher or lower inflation. LABOR MARKETS The March non-farm payroll employment report showed an increase of 180,000 jobs, which was much higher than consensus expectations. The unemployment rate declined to 4.4%. One of the leading factors in the strength of the employment report was a rebound in construction payrolls. The six-month average for non-farm payroll employment is now 164,000 jobs. March's employment report indicates continued moderate growth in the labor market. CREDIT SPREADS MIXED HOUSING STARTS Single-family housing starts rose by 10.3% in February, to a 1.22 million annual pace. This follows January's reading of 1.11 million. Single family housing permits declined. The combination of unusually warm weather in December followed by extremely cold temperatures in January and February has led to greater than usual volatility in housing data. Going forward, market participants will watch closely to see whether or not the decline in the housing market has run its course. MANUFACTURING During March the ISM Manufacturing Index declined to 50.9 from February's reading of 52.3.ISM readings below 50 indicate that the manufacturing sector of the economy is contracting; readings above 50 indicate that the manufacturing sector is in an expansionary phase. For the past several month's ISM readings have been fluctuating on either side of 50, leaving market participants unsure as to whether the manufacturing sector is expanding or contracting. CREDIT SPREADS Spre~d to One Month Chan e Treasunes (%) Ago (%) g 3-month top-rated commercial paper 0.17 0.07 0.10 2-year AA corporate note 0.36 0.35 0.01 5-year AA corporate note 0.51 0.52 (0.01 ) 5-year Agency note 0.31 0.28 0.03 Source: Bloomberg Data as of 3/31/07 MIXED ECONOMIC DATA ECONOMIC INDICATOR Current Release Prior Release One Year Ago Trade Balance (59.1) $Bln JAN 07 (61.5) $Bln DEC 06 (66.5) $Bln JAN 06 GDP 2.5% DEC 06 2.0% SEP 06 1.8% DEC 05 Unemployment Rate 4.4% MAR 07 4.5% FEB 07 4.7% MAR 06 Prime Rate 8.25% MAR 07 8.25% FEB 07 7.75% MAR 06 CRB Index 316.88 MAR 07 312.39 FEB 07 333.18 MAR 06 Oil (West Texas Int.) $65.87 MAR 07 $61.79 FEB 07 $66.63 MAR 06 Consumer Price Index (y/o/y) 2.4% FEB 07 2.1% JAN 07 3.6% FEB 06 Producer Price Index (y/o/y) 2.5% FEB 07 0.2% JAN 07 3.9% FEB 06 Dollar I EURO 1.34 MAR 07 1 .32 FEB 07 1.21 MAR 06 Source: Bloomberg Ci 200 7 Chandler Asset Management Inc, An Independent Registered Investment Adviser. The information contained herein was obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Opinions and forecasts regarding industries. companies, and/or the economy are all subject to change at any time, based on market and other conditions. and should not be construed as a recommendation. Page 3 CHANDLER ASSET MANAGEMENT · 92S5 Towne Centre Drive, Ste 350 · San Diego, CA 92121 · 800 3174747 · chandlerasset.com