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Week Ended April 13, 2012

Stocks Fall as Investors Question Strength of Global Recovery

Stocks declined for the week as the new earnings season appeared to be overwhelmed by resumed concerns about the U.S. jobs market, the European debt crisis, and the implications of slowing growth in China. The week got off to a poor start due to selling pressure that had been bottled up since the release of employment data while the market was closed the previous Friday. The official payroll count showed a gain of 120,000, well below most estimates and especially disappointing given other recent employment data. On Tuesday, the market suffered its biggest decline in a year as investors worried about a rise in Italian and Spanish borrowing rates-Spanish stocks hit their lowest level since the depths of the financial crisis in early 2009. Investors appeared particularly worried that Spain and Italy might not be able to keep borrowing rates at manageable levels once European banks stop purchasing their bonds with proceeds from a loan program established late last year by the European Central Bank. Markets recovered a bit as these worries eased somewhat on Wednesday due to reassuring comments from European officials. Investors were also relieved to see a solid world demand growth estimate from aluminum giant Alcoa. The positive momentum continued on Thursday, seemingly due to growing hopes that Chinese economic growth in the first quarter would be stronger than expected. These hopes were diminished, however, when China announced on Friday that its economy had grown at an annualized rate of 8.1% in the first quarter. While an enviable performance by developed economy standards, it was China's slowest growth in three years, and stocks retreated again to close the week.

European Debt Crisis Likely to Continue to Weigh on Markets

While the recently expanded eurozone bailout fund should be able to support Spain if it requires assistance, the margin is slim and more may need to be done. European leaders appear to be inclined to wait until the last possible minute to address crises as they occur and our analysts anticipate that the eurozone debt crisis has yet to conclude. Should another bout of financial contagion emerge, U.S. lending standards may tighten and weigh on capital investment.

U.S. Stocks¹
Index²	Friday's Close	Week's Change	% Change Year-to-Date
DJIA	12849.59	-210.55	5.17%
S&P 500	1370.26	-27.82	8.96%
NASDAQ Composite	3011.33	-69.17	15.59%
S&P MidCap 400	964.20	-20.66	9.64%
Russell 2000	796.34	-22.22	7.51%

This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.

¹Source of data Reuters, obtained through Yahoo! Finance Closing data as of 4 p.m. ET.

²The Dow Jones Industrial Average and the Standard & Poor's 500 Stock Index of blue chip stocks, the Standard & Poor's MidCap 400 Index, and the Russell 2000 Index are unmanaged indexes representing various segments by market capitalization of the U.S. equity markets. The Nasdaq Composite is an unmanaged index representing the companies traded on the Nasdaq stock market and the National Market System.

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U.S. Bond Market

Week Ended April 13, 2012

Mixed Economic News Leads to Volatility in Yields

The economic news was mixed during the week. On a negative note, the number of Americans applying for initial unemployment benefits rose to their highest level since January, fueling fears that the labor market was weakening after a period of steady progress. Balancing the news on the labor front, the U.S. trade deficit narrowed sharply in February, reversing much of the previous three months' increases, and producer prices were flat in March, indicating that inflation is not yet a major concern. Consumer inflation was less benign, boosted by higher food and gasoline prices. Treasury yields have been volatile but contained within a relatively tight range for months, reflecting uncertainty about the direction of Fed monetary policy. Ten-year Treasury yields soared from below 2.00% at the beginning of March to a test of the 2.40% level, as additional quantitative easing from the Fed appeared less likely. More recently, they retraced their ascent and dipped below 2.00% as problems in Spain and a weak employment report led to risk aversion. In this environment, we are cautious about the near-term prospects for high yield bonds. We remain positive on our longer-term outlook for high yield securities but expect to see some volatility during the next few months. Overall, the current environment remains uncertain, and investors have been getting paid less to take on risk. Treasury yields fell over the week, and the 10-year yield closed slightly below 2.00%.

U.S. Treasury Yields¹
Maturity	April 13, 2012	April 5, 2012
2-Year	0.27%	0.34%
10-Year	1.98%	2.17%
30-Year	3.13%	3.32%

This table is for illustrative purposes only. Past performance cannot guarantee future results.

¹Source of data: Bloomberg.com, as of 4 p.m. ET Thursday, April 13, 2012.

International Market

Week Ended April 6, 2012

International Stocks

Foreign stock markets closed lower for the week ending April 06, 2012 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), losing -2.97%.


Region/Country	Week's Return	% Change Year-to-Date
EAFE	-2.97%	7.68%
Europe ex-U.K.	-4.24%	7.82%
Denmark	0.57%	18.90%
France	-4.91%	6.78%
Germany	-4.21%	15.95%
Italy	-6.30%	2.04%
Netherlands	-4.57%	3.76%
Spain	-6.30%	-9.16%
Sweden	-4.50%	9.64%
Switzerland	-2.66%	7.64%
United Kingdom	-1.66%	5.85%
Japan	-3.39%	7.57%
AC Far East ex-Japan	0.23%	13.43%
Hong Kong	0.19%	13.64%
Korea	2.25%	18.05%
Malaysia	-0.17%	8.37%
Singapore	-1.75%	17.20%
Taiwan	-2.51%	11.61%
Thailand	-1.44%	19.41%
EM Latin America	-1.38%	13.12%
Brazil	-2.24%	11.35%
Mexico	-0.33%	15.20%
Argentina	-12.38%	-17.89%
EM (Emerging Markets)	-0.43%	13.65%
Hungary	-4.30%	17.47%
India	0.37%	20.49%
Israel	1.36%	10.19%
Russia	-1.40%	16.95%
Turkey	-2.40%	24.03%

International Bond Markets

International bond markets in developed countries were lower this week, with the J.P. Morgan Global Government Bond Less U.S. Index losing -1.15%.


Region/Country	Week's Return	% Change Year-to-Date
Developed Markets	-1.15%	-1.85%
Europe
Denmark	-1.99%	-1.22%
France	-2.58%	1.70%
Germany	-1.62%	1.24%
Italy	-3.44%	10.34%
Spain	-3.94%	-0.21%
Sweden	-0.79%	0.44%
United Kingdom	-0.68%	0.05%
Japan	-0.16%	-6.40%
Emerging Markets	-0.13%	3.91%
Argentina	-4.35%	-0.32%
Brazil	-0.29%	1.47%
Bulgaria	0.14%	3.41%
Russia	-0.02%	4.51%

International Currency Markets

On the currency front, the U.S. dollar was stronger against the major currencies for the week.


Currency	Close (April 6, 2012)	Week's Return (U.S. $)	% Change Year-to-Date (U.S. $)
Japanese yen	82.370	0.09%	6.59%
Euro	1.3063¹	1.91%	-0.63%
British pound	1.5831¹	0.92%	-1.86%

¹U.S. dollars per national currency unit.

Sources: Foreign stock markets and currency sections are from Rimes Technologies, using MSCI data. International bond markets are from J.P. Morgan.

Note: All returns are in U.S. dollars. All bond indices are J.P. Morgan. All stock indices are Morgan Stanley Capital International (MSCI).

Equity Indices
EAFE:	MSCI Europe, Australasia, and Far East Index
Europe Ex-U.K.:	MSCI Europe ex-U.K. Index
Far East Ex-Japan:	MSCI AC Far East ex-Japan Index
Latin America:	MSCI Emerging Markets Latin America Index
Emerging Markets:	MSCI Emerging Markets Index

Bond Indices
Developed Markets:	J.P. Morgan Global Government Bond Less U.S. Index
Emerging Markets:	J.P. Morgan Emerging Markets Bond Index Plus

All charts are for illustrative purposes only and do not represent the performance of any specific security. Past performance cannot guarantee future results.