Weekly Commentary

Capital Markets Review — August 27, 2010

KANSAS CITY (800) 548-2663 ST. LOUIS (800) 392-2252 WICHITA (800) 365-0349

AAA MUNICIPAL YIELDS vs. CURRENT US GOVT'S

Market Comment

Treasuries started the week stronger on a Wall Street Journal report debating the appropriate level of Fed assets. There were indications that the Fed's Jackson Hole meetings would generate plans for quantitative easing beyond simply rolling over their mortgage portfolio into Treasuries. Stocks gained while Treasuries retreated Friday after growth in GDP for the second quarter surpassed most economists’ estimates, momentarily easing concerns that the economy will lapse back into recession. Bernanke stated the US central bank will do all that it can to ensure a continuation of the recovery, including unconventional measures.

Tax-exempt and Treasury markets diverged late in the week, capping the enthusiasm to take tax-exempts higher. The sense is that market activity could lighten into the Labor Day weekend. Munis have traditionally experienced September market reversals as primary issuance builds after the summer doldrums.

Thomas Verstappen, Vice President Municipal Bond Trader

Calendar

Monday	Tuesday	Wednesday	Thursday	Friday
30-Aug	31-Aug	1-Sep	2-Sep	3-Sep
Personal Income	Existing Home Sales	ADP Employment Change	Factory Orders	Unemployment Rate
3&6 Mth Auc Settle 9/2	ABC Consumer Confidence	MBA Mortgage Applications	Initial Jobless Claims	Change in Nonfarm Payrolls

Market Information

Key Indices
	Current	Last Month	1 Yr Ago
Prime Rate	3.25	3.25	3.25
Discount Rate	0.75	0.75	0.50
Fed Funds	0.19	0.19	0.14
1-Mth Libor	0.27	0.33	0.29
11th Dist Cofi	1.80	1.79	1.60
1-Yr Cmt	0.25	0.30	0.46
Dow	10,104.00	10,537.70	9,580.63
Nasdaq	2,141.98	2,288.25	2,027.73
S&P 500	1,060.08	1,113.84	1,030.98
Bond Buyer	3.88	4.26	4.53

Municipal New Issue Calendar
Date	Amount	Description	Maturity
08/31/10	$2,945,000	Topeka KS T/N	2011
08/31/10	$24,995,000	Topeka KS T/N	2011
08/31/10	$36,290,000	Topeka KS GO	2011-2036
08/31/10	$4,590,000	Topeka KS BABS	2015-2030

Comparative Spreads

		New Issue Agencies				Muni
	Treasuries	Bullets	NC 6 Mon	NC 1 Yr	NC 2 Yr	AA - BQ
3 Mon Bill	0.14					0.20
6 Mon Bill	0.18					0.25
1-Yr Treas	0.24					0.30
2-Yr Note	0.52	16	15	13		0.45
3-Yr Note	0.77	14	32	30	22	0.60
5-Yr Note	1.40	24	48	44	34	1.30
7-Yr Note	1.98	28	52	44	33	1.85
10 Yr Bond	2.52	29	57	50	37	2.50
30 Yr Bond	3.55					4.00

**This Week's Buying Opportunity**

$120M Clay Cnty MO Gen Oblig BAB 5.40 03/01/30 @ 5.00 NR/AA Opt 03/01/20 at 100 (18347AFM8)

If you would prefer to receive this weekly newsletter via email please send an email to tynishia.goodlow@commercebank.com

Capital Markets Review is a publication of the Capital Markets Group of Commerce Bank, N.A. This material is for your private information and we are not soliciting any action based upon it. This is not an offer to buy or sell securities, and no responsibility is taken for any possible loss incurred by clients. The material is based upon information that we consider reliable, but Commerce Bank does not represent that it is accurate or complete, and it should not be relied upon as such. Commerce Bank does not assume any liability for your use of the information contained herein. Opinions expressed are statements of judgement on this data and are subject to change without notice. No part of this material may be copied, photocopied, or duplicated in any form by any means or redistributed without Commerce Bank's prior written consent. For more information, please contact your account representative.

Investments: NOT FDIC-INSURED May Lose Value No Bank Guarantee

Important Disclaimers:

To send an email that contains confidential information, please visit the Secure Message Center where there are additional instructions about whether to use Secure Email or Online Banking messaging.