Finance Highlights 2006 0503 - Laserfiche WebLink

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March 1, 2006 MARKET REVIEW A MONTHLY REVIEW OF FIXED INCOME MARKETS MARKET SUMMARY The Federal Open Market Committee increased the federal funds rate 0.25% to 4.50% on January 31, 2006 for the 14" consecutive time since the Fed began is rate tightening cycle in June 2004. The FOMC's most recent statement continued to highlight their concerns: "Although recent economic data have been uneven, the expansion in economic activity appears solid. Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures." The Committee has left the door open for future rate hikes as they strive to maintain the balance between sustainable economic growth and price stability. The next FOMC meeting will take place on March 28, 2006, where Ben Bernanke will be taking the helm as Fed Chairman. At that meeting, another 0.25% increase in the federal funds rate is generally expected. TREASURY YIELDS 'MIXED .0 5.0 . 3.0 `Legend FEB 06 2.0 ■ JAN 06 1.0 FEB 05 0.0 E- 3 month through 5year maturities increased in yield substantially, whitel0year maturities moved less dramatically. The long end of the curve saw yields decline significantly, heavily influenced by the re -issuance of the 30 yearbond. 3 Month 4.62 4.46 0.16 2 Year 4.68 4.52 0.16 3 Year 4.65 4.48 0.17 5 Year 4.60 4.45 0.15 10 Year 4.55 4.52 0.03 30 Year 4.51 4.68 (0.17) Syr - 2yr T -Note (0.08) (0.07) (0.01) 10yr - 2yr T -Note (0.13) 0.00 (0.13) Source: Bloomberg As of 2128/05