Weekly Commentary

Capital Markets Review — March 19, 2010

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Muni vs Treasury 12 Months

Market Comment

The FOMC announcement this week was essentially unchanged from the last meeting. Until employment and housing demonstrate consistent strength, the Fed will likely continue to keep rates subdued. The Fed reiterated this week it would keep borrowing costs low for an “extended” period of time and discontinue the mortgage-backed securities purchase program at month’s end.
The spread between 2-year and 10-year Treasury notes is the narrowest since January as reports this week showed consumer prices were unchanged last month and producer prices dropped more than forecast.
The biggest news in the municipal market came from Moody’s rating services moving to a global scale. Although this idea has been kicked around for over a year, Moody's has made the commitment to go global starting in April. The global scale is not as stringent as the current municipal rating scale and many credits are expected to be upgraded in the process, although re-ratings may take some time.

Thomas Verstappen, CMG Municipal Trader

Calendar

Monday	Tuesday	Wednesday	Thursday	Friday
15-Mar	16-Mar	17-Mar	18-Mar	19-Mar
	Existing Home Sales	Durable Goods Orders	Leading Indicators	Personal Consumption
3&6 Mth Auc Settle 03/25	2Yr Note Auc Settle 3/31	5Yr Note Auc Settle 3/31	7Yr Note Auc Settle 3/31	GDP Price Index
	House Price Index	New Home Sales	Initial Jobless Claims	U. of Michigan Confidence

Market Information

Key Indices
	Current	Last Month	1 Yr Ago
Prime Rate	3.25	3.25	3.25
Discount Rate	0.75	0.50	0.50
Fed Funds	0.19	0.12	0.18
1-Mth Libor	0.24	0.23	0.56
11th Dist Cofi	1.79	1.83	2.46
1-Yr Cmt	0.41	0.37	0.60
Dow	10,779.20	10,392.90	7,486.58
Nasdaq	2,391.28	2,241.71	1,491.22
S&P 500	1,165.83	1,106.75	794.35
Bond Buyer	4.32	4.38	4.98

Municipal New Issue Calendar
Date	Amount	Description	Maturity
3/23/10	$58,135,000	St Louis MO BAB	2026-2035
3/23/10	$63,125,000	St Louis MO	2012-2026

Comparative Spreads

		New Issue Agencies				Muni
	Treasuries	Bullets	NC 6 Mon	NC 1 Yr	NC 2 Yr	AA - BQ
3 Mon Bill	0.14					0.25
6 Mon Bill	0.22					0.30
1-Yr Treas	0.39					0.40
2-Yr Note	0.96	12	24	20		0.75
3-Yr Note	1.52	16	37	33	24	1.00
5-Yr Note	2.41	28	53	49	40	1.70
7-Yr Note	3.12	30	52	49	40	2.50
10 Yr Bond	3.67	43	57	56	45	3.10
30 Yr Bond	4.58					4.40

**This Week's Buying Opportunity**

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