Market Review and Outlook 3rd Quarter 2006
The 3rd quarter was characterized by a significant decline in intermediate and long term bond rates. For example, the 10-Year Treasury opened the quarter at 5.14% (after having peaked at 5.25% on June 28), while it ended the quarter at 4.65%, a remarkable decline of 60 basis points. Similarly, the 5-Year Treasury opened the quarter yielding 5.09%, and ended at 4.54%. Throughout this period, the Fed held short term rates constant at 5.25%, significant in that it was the first time they paused in raising rates since June of 2004.