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Week Ended December 17, 2010

The broad market gauges rose modestly for the week and reached new two-year highs. Investors were encouraged by a variety of U.S. economic data, including a healthy rise in November retail sales, solid gains in two regional manufacturing indexes, another decline in weekly jobless claims, and a large rise in the Conference Board’s index of leading economic indicators. Congressional approval of a deal to extend tax cuts and unemployment benefits also appears to have boosted sentiment. The Federal Reserve’s statement following its policy meeting on Tuesday may have also encouraged investors, as it included a commitment from the central bank to continue with plans to buy long-term Treasury bonds in order to keep interest rates low and spur economic growth. The yield on 10-year Treasury notes jumped to its highest level in several months at midweek, however, which helped push mortgage rates higher and drained some the enthusiasm for the stock market rally. Investors were also troubled by continuing troubles in European debt markets as Ireland endured another downgrade to its credit rating and ratings agencies warned of credit problems in Spain and Belgium.

U.S. Stocks¹
Index²	Friday's Close	Week's Change	% Change Year-to-Date
DJIA	11491.91	81.59	10.20%
S&P 500	1243.91	3.51	11.55%
NASDAQ Composite	2642.97	5.43	16.47%
S&P MidCap 400	902.64	3.60	24.21%
Russell 2000	779.35	3.16	22.91%

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 4:10 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 December 17, 2010

The U.S. Congress approved the tax bill that President Obama worked out with Republican support, extending the Bush-era tax cuts for another two years. The President expressed hope that the measure will help stimulate economic growth as we move into 2011, and he signed the bill into law Friday afternoon. Underlining ongoing concerns about the tepid recovery, the Federal Open Market Committee (FOMC) announced that it would maintain its expansive monetary policy for a while longer. The FOMC said “the economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment.” Inflation remains subdued, with consumer prices rising only 0.1% in November, below expectations. The bond market appears to be anticipating a stronger recovery down the road, as longer-term Treasury yields have been moving up in recent weeks—although they ended trading on Friday at or close to their levels of last week.

U.S. Treasury Yields¹
Maturity	December 17, 2010	December 10, 2010
2-Year	0.60%	0.63%
10-Year	3.32%	3.32%
30-Year	4.42%	4.43%

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, December 17, 2010.

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International Market

Week Ended December 10, 2010

International Stocks

Foreign stock markets closed higher for the week ending December 10, 2010 with the broad international measure, the MSCI EAFE Index (Europe, Australasia, and Far East), gaining 0.36%.


Region/Country	Week's Return	% Change Year-to-Date
EAFE	0.36%	5.87%
Europe ex-U.K.	0.22%	0.86%
Denmark	1.34%	26.76%
France	1.38%	-3.56%
Germany	-0.39%	8.98%
Italy	0.49%	-14.41%
Netherlands	0.74%	-0.21%
Spain	-0.47%	-19.95%
Sweden	-2.22%	28.75%
Switzerland	0.63%	8.67%
United Kingdom	1.68%	8.17%
Japan	-0.78%	10.40%
AC Far East ex-Japan	0.04%	17.45%
Hong Kong	-0.98%	23.23%
Korea	1.21%	22.06%
Malaysia	0.97%	33.33%
Singapore	0.01%	18.92%
Taiwan	1.78%	15.79%
Thailand	-0.19%	57.95%
EM Latin America	-2.28%	9.84%
Brazil	-3.27%	0.93%
Mexico	-0.04%	23.55%
Argentina	3.14%	79.86%
EM (Emerging Markets)	-0.60%	15.32%
Hungary	-1.97%	-10.05%
India	-2.08%	14.27%
Israel	3.46%	2.40%
Russia	0.95%	16.11%
Turkey	-5.77%	22.81%

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 -1.58%.


Region/Country	Week's Return	% Change Year-to-Date
Developed Markets	-1.58%	3.83%
Europe
Denmark	-1.72%	-0.76%
France	-1.36%	-2.78%
Germany	-1.72%	-2.32%
Italy	-1.95%	-7.39%
Spain	-2.94%	-12.16%
Sweden	-1.38%	7.13%
United Kingdom	0.09%	3.58%
Japan	-1.76%	12.51%
Emerging Markets	-0.86%	13.00%
Argentina	0.04%	34.18%
Brazil	-1.36%	11.24%
Bulgaria	0.34%	8.42%
Russia	-1.08%	8.32%

International Currency Markets

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


Currency	Close (December 10, 2010)	Week's Return (U.S. $)	% Change Year-to-Date (U.S. $)
Japanese yen	83.930	1.52%	-10.92%
Euro	1.3221¹	1.21%	7.85%
British pound	1.5793¹	-0.47%	2.20%

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.