ECONOMIC & BOND MARKET QUARTERLY UPDATE - Third Quarter 2007


Inside This Issue - Third Quarter 2007

> The Evolving Risk / Reward Landscape

Investor psychology is one of the most significant and unpredictable variables in the financial markets.

> Credit Crunch Bites Down on Markets—Fixed Income Sector Review

Corporates turned in their worst excess return performance in five years underperforming duration matched Treasuries by 244 basis points as spreads widened by 48 basis points during the quarter.

> Economic Update

In September, the Fed surprised market participants with a 50 basis point cut in the target funds rate, from 5.25% to 4.75%, marking the first change in the official policy rate in more than a year and the first reduction since 2003.

> Dwight News

Adam White joins Dwight as Quantitative Analyst; Jason Wyman, Ph.D., joins Dwight as Quantitative Analyst.

Investment Results as of 9/30/07 [login required]

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