Sage Advice Quarterly Market Review 3Q2006

After a punishing second quarter, the third quarter provided a much more hospitable backdrop for the capital markets, with the Fed moving to the sidelines, subdued inflation data and falling energy prices. Investor response was universal as both the stock and bond markets staged significant rallies with yields falling sharply across the curve and equity indexes pushing toward multi-year highs. On the fixed side the Lehman Aggregate posted its first positive quarter of the year – returning 3.81%. Long-dated treasuries realized the best absolute returns as yields along the back end of the curve fell 40-50 basis points.