Alert February 28, 2011

Bond Market Snapshot

This month, the yield gap between treasuries and municipal bonds continued to narrow, with 10-year treasury notes overtaking 10-year municipal bonds for the first time since September 2010. The unrest in the Middle East, which could prompt some investors to make safe trades, is pushing against the recent positive news about lower unemployment claims, resulting in a relatively calm bond market.

The yield on AAA-rated municipal bonds fell this month from 5.20% to 4.80% for 30-year bonds and from 3.56% to 3.36% for 10-year bonds. Yields on treasuries dropped slightly from 4.56% to 4.52% for 30-year bonds, but increased from 3.37% to 3.41% for 10-year notes.

Source: Bloomberg (www.bloomberg.com)