Chandler Bond Market Review

Economic Roundup November 2012

Consumer Prices
In September, overall CPI inflation rose to 2.0% on a year-over-year basis from 1.7% in August, largely driven by a continued rise in energy prices. The year-over-year Core CPI (CPI less food and energy) rose slightly to 2.0% in September, from 1.9% in August. The core inflation rate is in line with the Fed’s inflation target of 2.0%.

Labor Markets
The October employment report showed that payrolls increased by 171,000 (above the consensus estimate of 125,000), following a gain of 148,000 in September. However, the unemployment rate edged up to 7.9% from 7.8% in September, driven by an increase in the labor force. The employment report continues to reflect an overall slow pace of growth in the domestic economy.

Retail Sales
In September, Retail Sales rose 5.4% on a year-over-year basis. On a month-over-month basis, Retail Sales rose 1.1% in September, exceeding the consensus forecast. Spending trends have been modest, but elevated unemployment levels and high gas prices continue to put pressure on the consumer.

Housing Starts
Single-family housing starts rose 11% to 603,000 in September, on top of a 7% increase in August. Recent data suggests that the housing market is beginning to rebound.

Credit Spreads November 2012

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and views constitute judgments or relevant information as of the date of writing and such information may become outdated or superseded at any time without notice.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