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‘Week Ended June 29, 2012

Friday's rally lifts U.S. stocks for the week

U.S. stocks rose after a rally on Friday following news that European leaders agreed on a series of short-term measures to alleviate the region's debt crisis. Among other things, leaders agreed to speed up plans to create a single supervisor for banks and use the region's bailout funds to recapitalize struggling banks without adding directly to their countries' sovereign debt. The news from Europe—which came at the end of a two-day summit in Brussels—exceeded the expectations of investors who have become accustomed to previous make-or-break summits aimed at restoring confidence in the currency zone. The Europe-inspired gains more than offset earlier declines arising from indicators showing a sluggish U.S. recovery.

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U.S. Stocks¹
Index²	Friday's Close	Week's Change	% Change Year-to-Date
DJIA	12880.09	238.40	5.42%
S&P 500	1362.16	27.14	8.31%
NASDAQ Composite	2935.05	42.63	12.66%
S&P MidCap 400	941.15	24.19	7.05%
Russell 2000	797.36	21.97	7.62%

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 June 29, 2012

U.S. interest rates end the quarter near their historical lows

News that European leaders agreed to new measures to deal with the eurozone debt crisis—in particular, recapitalizing Spanish banks—sparked a sell-off in U.S. Treasuries Friday as investors once again eyed riskier assets. Concerns remain, however, and T. Rowe Price analysts believe that interest rates in the U.S. and other developed markets will remain low for some time. While investors' appetites for higher yields through the assumption of greater risk could strengthen in the short term, we do not believe the trend will continue until we move beyond the November elections. High yield bonds held up reasonably well, thanks partly to short-term technical factors as high yield investors needed to deploy their cash reserves.

Municipal bonds remained stable through the week. The tax-exempt market has been treading water against the backdrop of new accounting rules exposing the underfunding of many public pension plans. Stockton, California, for example, made headlines by announcing that it would file for bankruptcy, making it the largest municipal bankruptcy to date. In the taxable arena, U.S. investment-grade debt sold off early in the week, reflecting weakness in the equity markets, but the bonds stabilized later. New issuance picked up as several companies came to the market with sizable offerings, which were greeted by strong demand from investors.

U.S. economic growth continues amid mixed signals

Despite some pessimism in various circles, the data released at the end of the month indicated that the U.S. manufacturing sector remains reasonably strong. Demand for U.S. goods rebounded more than expected in May, but the question remains whether the momentum is sustainable if global growth weakens further. In addition, sales of existing homes reached a two-year high in May in an environment of historically low interest rates, spurring some hope that the housing market is slowly recovering. The economic signals are mixed as investors look for clues about where the market is heading in the months ahead.

U.S. Treasury Yields¹
Maturity	June 29, 2012	June 22, 2012
2-Year	0.31%	0.30%
10-Year	1.65%	1.67%
30-Year	2.76%	2.76%

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

¹Source of data: Bloomberg.com, as of 4 p.m. ET Friday, June 29, 2012.

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International Market

Week Ended June 15, 2012

International Stocks

Foreign stock markets closed higher for the week ending June 22, 2012 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 0.37%.


Region/Country	Week's Return	% Change Year-to-Date
EAFE	0.37%	0.16%
Europe ex-U.K.	0.35%	-1.09%
Denmark	1.07%	10.95%
France	-0.37%	-1.53%
Germany	-0.16%	3.17%
Italy	2.05%	-9.04%
Netherlands	-0.40%	-3.02%
Spain	1.86%	-18.36%
Sweden	2.71%	3.62%
Switzerland	0.48%	1.74%
United Kingdom	0.19%	1.46%
Japan	1.00%	-0.25%
AC Far East ex-Japan	-0.63%	4.06%
Hong Kong	-0.48%	5.53%
Korea	-0.43%	4.05%
Malaysia	0.68%	4.31%
Singapore	0.01%	11.54%
Taiwan	0.71%	2.09%
Thailand	-2.78%	12.01%
EM Latin America	-0.07%	-2.73%
Brazil	-1.28%	-8.93%
Mexico	3.40%	7.80%
Argentina	8.84%	-47.20%
EM (Emerging Markets)	-0.81%	1.82%
Hungary	1.60%	10.74%
India	-2.58%	3.31%
Israel	-2.16%	-7.56%
Russia	-4.00%	-2.87%
Turkey	3.56%	23.22%

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 -1.18%.


Region/Country	Week's Return	% Change Year-to-Date
Developed Markets	-1.18%	-1.17%
Europe
Denmark	-2.16%	-2.41%
France	-0.84%	0.40%
Germany	-1.48%	-1.39%
Italy	0.83%	4.93%
Spain	1.85%	-6.92%
Sweden	-0.35%	-1.27%
United Kingdom	0.01%	2.41%
Japan	-2.08%	-3.10%
Emerging Markets	-0.15%	6.26%
Argentina	-2.26%	-6.52%
Brazil	-0.50%	5.19%
Bulgaria	-0.29%	3.29%
Russia	-0.19%	5.87%

International Currency Markets

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


Currency	Close (June 22, 2012)	Week's Return (U.S. $)	% Change Year-to-Date (U.S. $)
Japanese yen	80.495	2.19%	4.42%
Euro	1.2536¹	0.71%	3.44%
British pound	1.5559¹	0.54%	-0.12%

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.’