ECONOMIC MONITOR
MONTHLY REVIEW UNITED STATES – FINANCIAL MARKETS
US INTEREST RATES
18
The Fed confirmed on June 22 that QE2 would end this month, as scheduled. But it also repeated that interest rates would remain unusually low for an extended period.
15
Bond Yields – 10-year
12
f
9 6
T-Bills
3 0
Last month: May 2011
Percent
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
AAA CORPORATE BOND YIELDS
7.5
Moody’s AAA Yield
Treasury yields have recently moved down more than better grade corporate yields.
f
3.5
Moody’s AAA – US 10-year rate spread
7.0
3.0
6.5
2.5
6.0
2.0
5.5
1.5
5.0
1.0
4.5 4.0
2-Jul-07
14-Jan-08
0.5
Daily Last day: June 22, 2011
Percent 28-Jul-08
9-Feb-09
24-Aug-09
8-Mar-10
0.0 20-Sep-10
4-Apr-11
source: Federal Reserve
HIGH-YIELD BOND YIELDS 24 22
And low grade corporate yields have been rising as slowing economic growth increases financial risk.
f
Merrill Lynch High Yield Corporate Bonds less US 10-year rate spread
Merrill Lynch High Yield Corporate Bond Yield
20
20
18
18
16
16
14
14
12
12
10
10
8
8
6
6
4
Daily Last day: June 22, 2011
4 2
Percent
3-Jul-07
30
22
15-Jan-08
2 0
29-Jul-08
10-Feb-09 25-Aug-09
9-Mar-10
20-Sep-10
5-Apr-11
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