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Monthly Market Monitor - December 2010

Market Indices1NovemberYear-to-Date
S&P 5000.01%7.86%
MSCI EAFE-5.03%-2.89%
MSCI Emerging Markets-2.70%8.73%
Barclays U.S. Aggregate Bond-0.57%7.70%
Barclays Municipal-2.00%4.40%
Barclays US Corporate High Yield-1.17%13.07%

Global equity markets ended the month of November flat to modestly lower, driven primarily on resurging fears over Europe’s crippling debt crisis and potentially rising interest rates in China. In the U.S., equity markets ended up flat for the month after initially rallying over 3%. The MSCI EAFE Index fell 5% for the month as the European debt crisis weighed on equity markets globally. Ireland became the second EU member to accept outside aid (after Greece) and contagion fears once again spread over the fate of other distressed economies in the region, particularly Portugal and Spain. Emerging markets also fell for the month, but at a more modest -2.7%. The continued rapid pace of China’s emerging growth appetite appears threatened after a heady 4.4% inflation rate spawned expectations that Chinese finance ministers may tighten credit lending regulations and raise interest rates in an attempt to dampen further price hikes.

Fixed income markets reversed course in November and finished lower for the month. The Federal Reserve’s second round of quantitative easing, being dubbed the QE2 program, sent interest rates slightly higher as confidence rose on the sustainability of the US economic recovery. Expectations for improving retail sales came true this holiday shopping season as consumers ramped up their early holiday purchases by 13% from this time last year. The 2010 Thanksgiving Day Cyber Monday came in as the best online shopping day in US history.

  1. Morningstar Direct

Prepared by:Richard Anderson, Equity Research Director and Alex Kaye, CFA, Head of Research Research Department, Cetera Financial Group

If you have any questions, please contact Scott Rivera, Cetera Financial Group, at (310) 257-7689.The views are those of Richard Anderson, Equity Research Director and Alex Kaye, CFA, Head of Research, Research Department, Cetera Financial Group, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

All economic and performance information is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot directly invest in unmanaged indices. Please consult your financial advisor for more information.

Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.

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