Chandler Bond Market Review

Economic Roundup December 2013

Consumer Prices
In October, overall CPI inflation fell to 1.0% on a year-over-year basis from 1.2% in September. The year-over-year Core CPI (CPI less food and energy) was unchanged at 1.7%. The core inflation rate is still trending below the Fed’s long-term goal of 2.0% and remains below the trigger rate for policy action of 2.5%.

Retail Sales
In October, Retail Sales rose 3.9% on a year-over-year basis up from 3.4% in September. On a month-over-month basis, Retail Sales rose 0.4% in October which exceeded the consensus forecast.

Labor Markets
The November employment report was better than expected as payrolls rose by 203,000 exceeding the 180,000 consensus estimate. The unemployment rate declined to 7.0% from 7.3%. Net revisions for job growth in September and October were +8,000. Average nonfarm payroll growth over the past 3 months has been about 193,000. Private payrolls increased 196,000 in November while government jobs rose 7,000.

Housing Starts
Single-family housing starts rose 5.6% in August to 620,000 from 587,000 in July.

Credit Spreads

Economic Data

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and views constitute judgments or relevant information as of the date of writing and such information may become outdated or superseded at any time without notice.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