Chandler Bond Market Review

Economic Roundup March 2012

Consumer Prices
In January, the CPI showed consumer prices increased 2.9% on a year-over-year basis.  The year-over-year Core CPI (CPI less food and energy) increased at a 2.3% rate.  Overall, price increases remained subdued.  However, concerns have recently developed about rising oil prices and the negative impact higher prices at the pump could potentially have on consumer spending.

Labor Markets
The February employment report showed the economy added 227,000 jobs, with the six-month average slightly higher than 200,000 jobs.  The unemployment rate remained unchanged at 8.3%.  This report was better than analysts’ expectations.  Although the unemployment rate remains elevated, current economic data suggests the labor market is improving at a slow but steady pace.

Retail Sales
In December, Retail Sales rose 6.5% on a year-over-year basis.  Consumer spending has rebounded from the depths of the recession and recent activity was moderate; however, high unemployment continues to restrain consumer spending.

Housing Starts
Single-family housing starts declined 1.0% in January to 508,000, compared to 513,000 in December. The housing market remains under pressure, but seems to have stabilized following several years of sharp declines, and some housing data has recently surprised to the upside.

Credit March 2012

RISKS AND OTHER IMPORTANT CONSIDERATIONS

This report is provided for general information purposes only and should not be construed as specific legal, tax, or financial planning advice. All opinions and views constitute judgments or relevant information as of the date of writing and such information may become outdated or superseded at any time without notice. This report is not intended to constitute an offer, solicitation, recommendation or advice regarding any securities or investment strategy. This information should not be regarded by recipients as a substitute for the exercise of their own judgment. Fixed income investments are subject to interest, credit, and market risk. Interest rate risk: the value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market in general could decline due to economic conditions,especially during periods of rising interest rates.

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