Community Bank of San Joaquin Trust and Investment Telegram March 22, 2002 IN THIS ISSUE: 1. Economic Highlights 2. Bond Market Comments 3. Stock Market Comments 4. Legal Disclaimer 5. Subscribe / Unsubscribe -------------------------------------------------------------- Economic Highlights * Fed holds rates steady, sees economic recovery on the horizon: - On Tuesday, the Federal Reserve's Open Market Committee voted unanimously to leave the target overnight lending rate at the existing forty-year low of 1.75%. However, Fed policy makers leaned away from their fifteen-month position that weak growth posed the greatest threat to the economy. A Fed spokesman stated that, "the information that has become available since the last meeting of the committee indicates that the economy, bolstered by a marked swing in inventory investment, is expanding at a significant pace". - Consumer prices in the U.S. rose 0.2% in February, in line with expectations. The Labor Department announced that the core CPI, which excludes the more volatile food and energy prices, rose 0.3%, more than the forecasted increase of 0.2%. Core prices were driven higher by increases in the cost of medical care, clothing and tobacco. Real earnings, or the change in the average weekly earnings adjusted for inflation, fell 0.1%. - The Conference Board's index of leading economic, designed to predict economic performance over the next three to six months, remained unchanged in February. Analysts had forecasted an increase of 0.1%. - The Commerce Department reported that housing starts in the U.S. unexpectedly rose 2.8% to a three-year high in February. The increase to 1.769 million units was significantly higher than the forecasted decline to 1.635 units from January's level of 1.721. -------------------------------------------------------------- Bond Market Comments * Bond yields continue to rise: - U.S. Treasuries fell as evidence mounts that the rebounding U.S. economy may prove inflationary. The "real", or inflation-adjusted, return on the ten-year Treasury note is currently 4.35%, significantly more than the historical real return of approximately 2.00%, indicating that fixed income investors are demanding higher yields in anticipation of an increase in over-all price levels. - For the week, the 30-year Treasury bond's yield rose 10 basis points to close at 5.81%. The 10-year Treasury note's yield rose 7 basis points to close at 5.40.%. -------------------------------------------------------------- Stock Market Comments * Stock retrench previous weeks gains: - For the week the Dow Jones Industrials fell 179 points or 1.7%, closing at 10,428. The broader S&P 500 fell 17 points, or 1.5%, to close at 1,149. The NASDAQ Composite dropped 17 points, or 0.9%, to close at 1,851. -------------------------------------------------------------- Legal Disclaimer Community Bank of San Joaquin Trust and Investment Telegram contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific securities does not constitute an offer to buy or sell securities. The past performance of a mutual fund, stock, or investment strategy cannot guarantee its future performance. This email newsletter is offered on a subscription-only basis. Because of the complexity of this service and its dependence on other systems, we cannot be responsible for delays or failures in forwarding or transmission. For further assistance please contact us at trust@communitybanksj.com or (209) 956-7000. -------------------------------------------------------------- Subscribe/ Unsubscribe To subscribe or unsubscribe to this email service visit our web site at http://www.communitybanksj.com/trust.