iShares Investment Strategy Group Market Update
Morningstar Market Commentary – 4Q2011
Consumer Credit Increases $20.4B in November
Last week:
Consumer credit increased $20.4B in November; what was the primary driver of this increase?
Answer:
Approximately 75% of the rise in consumer credit was due to an increase in non-revolving credit, which continued to show strength in student loans.
Next week:
How much did the Federal Reserve’s Treasury holdings increase in 2011?
Source: Federal Reserve, J.P. Morgan Asset Management
10-Year Treasury Returns Over Periods of Rising Rates
Unemployment Numbers Better for College Grads
Last week:
What was the unemployment rate in December 2011 for people with a college degree or greater?
Answer:
The unemployment rate in December 2011 for people with a college degree or greater was 4.1%.
Next week:
Consumer credit increased $20.4 billion in November; what was the primary driver of this increase?
Source: BLS, J.P. Morgan Asset Management
The Big Mac Index / Currency Exchange Rates
The Economist’s Big Mac index is based on the theory of purchasing-power parity: that, in the long run, exchange rates should adjust to equal the price of a basket of goods and services in different countries. Our basket consists of one McDonald’s Big Mac, and we’ve compared it with the average price in America, $4.20. According to our burgernomics, the Swiss franc is 62% overvalued: the exchange rate that would equalise the price of a Swiss Big Mac with an American one is 1.55 francs to the dollar; the actual exchange rate is only 0.96. The cheapest burger is found in India, where it costs just $1.62. Big Macs aren’t sold in India, so we’ve taken the price of a Maharaja Mac, made with chicken instead of beef.
Source: The Economist
10-Year U.S. Treasury Yield in 2011
Last week:
What was the lowest closing level of the yield on 10-year U.S. Treasury bonds in 2011?
Answer:
In 2011, the lowest closing yield on the 10-year U.S. Treasury was 1.72%
Next week:
What was the employment rate in December 2011 for people with a college degree or better?
Source: BLS, J.P. Morgan Asset Management



