iShares Investment Strategy Group Market Update

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Morningstar Market Commentary – 4Q2011

{for client use only – please email for your copy}

Source: Morningstar

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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

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10-Year Treasury Returns Over Periods of Rising Rates

Source: Barclays Capital, J.P, Morgan Asset Management

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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

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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

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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

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