The character of the US economic recovery from the credit crisis however tempers our near-term expectations for how high rates could rise even if the European crisis ebbs. The US suffers from a two-speed recovery."Matterhorn" represents the corporate sector's swift rebound and healthy balance sheets, along with continual benefits from the global liquidity glut supplied by central banks' easy money policies."Ayers Rock" represents consumers' slow and languishing recovery, burdened by balance sheets still over-allocated to housing whose price government foreclosure mitigation policy refuses to let fall to reality. Lacking confidence in jobs, income or wealth, spending cannot exceed income growth that languishes from a lackluster jobs market.

Investment involves risk. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. Investments in non-investment-grade debt securities ("high yield" or "junk" bonds) may be subject to greater market fluctuations and risk of default or loss of income and principal than securities in higher rating categories.

Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

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