Alert December 21, 2009

Bond Market Indicators

The yield on AAA-rated municipal bonds dipped slightly in December 2009 to 4.47% for 30-year bonds and 3.17% for 10-year bonds. During the same period, the yield on Treasuries increased slightly to 4.43% on 30-year bonds and 3.52% on 10-year notes, pushing the 10-year muni-treasury yield ratio back under 100% to 90.1%.

Source: Bloomberg (www.bloomberg.com)

Some indicators relevant to the bond market have improved slightly in late 2009.  The Consumer Price Index rose 0.4% in November, and 1.8% during the past 12 months, which is the first positive 12-month change since February 2009.  Unemployment dropped from 10.2% to 10.0% in November.  Both existing and new home sales increased in October by 10.1% and 6.2%, respectively, and housing starts rose in November by 8.9%.  Here are the official numbers:

Sources: Unemployment Rate and Consumer Price Index: U.S. Bureau of Labor Statistics (www.bls.gov)
                 Existing/New Home Sales and Housing Starts: National Association of Realtors (www.realtor.org)