Chandler Bond Market Review

Economic Roundup April 2012

Consumer Prices
In February, 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 2.2% rate. Overall, price increases remained subdued. However, concerns recently developed about rising oil prices and the negative impact higher gas prices at the pump could have on consumer spending.

Labor Markets
In February, Retail Sales rose 6.5% on a year-over-year basis. Consumer spending rebounded from the depths of the recession and recent activity was moderate; however, high unemployment continues to restrain consumer spending. High gas prices may also pose a headwind to future consumer spending.

Retail Sales
The March employment report showed the economy added 120,000 jobs. The report was moderately disappointing, even though the unemployment rate declined 0.1% to 8.2%. Although the unemployment rate remains elevated, current economic data suggests the labor market is improving at a slow but steady pace.

Housing Starts
Single-family housing starts declined 9.9% in February to 457,000, compared to 507,000 in January. However, there was strength in multi-family starts which rose 21.1% for the month. The housing market remains under pressure, but seems to have stabilized following several years of sharp declines. Some housing data has recently surprised to the upside.


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and views constitute judgments or relevant information as of the date of writing and such information may become outdated or superseded at any time without notice.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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