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Calvert Investments Week in ReviewWeek Ended


									  Calvert Investments’ Week in Review—Week Ended 6/15/12
  Equity Market Commentary               The 10-year yield on Italian sovereign debt
                                                      increased in sympathy throughout the week, but
                                                      dropped below the 6% threshold by the week’s
                      By Natalie Trunow,              end. Italy is having difficulty implementing labor
                      Chief Investment Officer,       reforms and is now in a severe recession.
                      Calvert Investment              France lowered its retirement age, assuring a
                      Management, Inc.                 higher probability of France “graduating” into a
                                                       peripheral economy over time.

                                                      German bond spreads relative to the U.S. stayed
                                                       wide with the German economy likely slipping
   For the week, the S&P 500, Russell 1000,           into recession.
    Russell 2000, MSCI EAFE, and MSCI Emerging
    Market indices returned 1.34%, 1.12%, 0.33%,
                                                      Greek elections will be held this Sunday. Reports
    2.32%, and 2.35%, respectively. The top three
                                                       surfaced late in the week that secret polls were
    performing sectors in the Russell 1000 were
                                                       giving an edge to the New Democracy Party,
    telecoms, energy, and healthcare, while
                                                       which would adhere to the international bailout
    consumer discretionary, materials, and IT
                                                       agreement. Whatever the outcome, the
                                                       sovereign debt crisis in Europe is likely to
                                                       continue with or without Greece’s potential exit
   The eurozone continues to struggle with its        from the eurozone.
    sovereign debt crisis and accelerating
    recession. European core economies continue
                                                      The Bank of England announced a $150 billion
    to show signs of weakness. Industrial
                                                       liquidity program at the end of the week.
    production in the eurozone declined 0.8% in
    April from the prior month and was down
    2.3% on a year-over-year basis. Core CPI was      Economic growth in China continues to slow,
    up 1.6%, while headline CPI was up 2.5% on a       although this week’s data showed slight
    year-over-year basis in May. Deflation in          improvement in industrial production, retail
    Europe is not out of the question in the near      sales, new loans and foreign investment.
    future, which could be a significant problem.
    Reports indicated daily withdrawals from          In the U.S., this week’s data showed a slight
    Greek banks have ranged from €100 million to       decline in retail sales, although sales of motor
    €500 million this month.                           vehicles were up, reflecting continued challenges
                                                       in the labor market. Initial jobless claims
   Eurozone officials agreed to a €100 billion        increased to 386,000 for the week ending June 9,
    bailout for Spain’s banks. However, the debt       after the prior week’s initial claims were revised
    still went through the government and not as       upward to 380,000. The four-week moving
    direct financing to banks, which will increase     average is now up to 382,000. At the same time,
    Spain’s debt load. Not surprisingly, Moody’s       continuing claims fell slightly and small business
    downgraded Spain’s credit rating this week by      employment data held up okay. The University of
    three notches to Baa3, one level above junk        Michigan Survey Of Consumer Sentiment
    status. Investors responded to the country’s       preliminary reading for June indicated consumer
    “admission” of the problems in their banking       confidence dropped from the prior month.
    sector by pushing yields up even higher on
    Spanish sovereign debt, with the 10-year yield    U.S. housing activity continues to recover.
    ending the week at 6.87%.                          Mortgage applications, as measured by the
                                                       Mortgage Bankers Association (MBA) Mortgage
                                                       Applications Index, surged 18% during the period
                                                       ending June 8, while the refinance gauge also
  increased. A low dollar is contributing to         Key Market Indicators
  improvement in U.S. housing activity.              Indicator          6/15/12                     6/8/12
  According to data released by the National         Fed Funds Target        0%-0.25%          Unchanged
  Association of Realtors during the week,           Rate
  international buyers accounted for 9% of total     10-Year Treasury          1.58%          -6 basis points
  spending on residential real estate in the U.S.    Bond Yield
  over the trailing 12-month period ending in        DJIA                    12,767.17      + 212.97 (+3.59%)
  March of this year. This represented a 24%         S&P 500                 1,342.84       + 17.18 (+3.73%)
  year-over-year increase in sales to
                                                     Oil                      $84.03                 -$-0.07
  international buyers, as foreigners, especially
  Canadians, have been taking advantage of the       U.S. $ vs. Euro         € 0.7914              - € 0.0076
  weak dollar and historically low U.S. home
                                                     U.S. $ vs. Yen           ¥ 78.73               -¥ 0.76
                                                     Unemployment           8.2% (May)             8.1% (April)
 The U.S. Consumer Price Index (CPI) declined                                 April                Year Ago
  0.3% in May from the prior month, a slightly
  larger drop than anticipated, and was up 1.7%      Consumer Price           228.53                 + 1.7%
  on a year-over-year basis compared to 2.3% in
                                                     Source: Calvert Investment Management, Inc.
  April. Core CPI, which excludes the more
  volatile food and energy components, was up
  0.2% from the prior month and 2.3% on a
  year-over-year basis, in line with expectations.
  The Producer Price Index (PPI) declined 1% in
  May from the prior month, a significantly
  greater drop than forecast, and was up just
  0.7% on a year-over-year basis. Gasoline
  declined 8.9% on a month-over-month basis,
  contributing to the unexpected large decline
  in May’s PPI. These data support the low
  inflation expectations and will allow the Fed
  to continue with quantitative easing
  initiatives, such as an extension of “operation
  twist” and/or purchases of asset-backed
  securities, if necessary.

 These data suggest that, while a global
  economic slowdown is likely having a
  marginally negative impact on the U.S.
  economy, it is still likely to continue its slow
  expansion for the time being, although the
  impending fiscal cliff in the U.S. will likely
  cause further indigestion for investors
Fixed-Income Market Commentary                       Treasury Yield Curve

                     By Cathy Roy, CFA
                     Chief Investment Officer,
                     Fixed Income
                     Calvert Investment
                     Management, Inc.

 Inflation data released this week came in
 more benign than expected. The producer             Source: Calvert Investment Management, Inc.
 price index (PPI) fell a full percentage point as
 slowing global growth tempered demand for           The Week Ahead:
 raw materials. Consumer prices, as measured          Monday, June 18: Housing Market Index figures
 by the CPI index, declined 0.3%, which was the        reported
 largest drop since late 2008. Jobless claims         Tuesday, June 19: Housing Starts data released
 also unexpectedly rose by 6,000 to 386,000 for       Wednesday, June 20: FOMC Meeting
 the week ended June 9. Friday’s release of the        Announcement and Forecasts issued, FOMC
 Empire State Manufacturing Survey — which             Chairman’s Press Conference takes place, EIA
 measures manufacturing activity in New York           Petroleum Status Report released
 State — showed a disappointing drop to a             Thursday, June 21: Existing Home Sales reported,
 seven-month low. Taken together, the week’s           Philadelphia Fed Survey released
 economic data releases suggest the Federal
 Reserve has the room to roll out another            This commentary represents the opinions of its authors as of
 round of quantitative easing.                       6/15/12 and may change based on market and other
                                                     conditions. Their opinions are not intended to forecast future
                                                     events, guarantee future results, or serve as investment
 Treasury yields were mixed week over week.         advice.
  The two- and 10-year benchmark yields
  moved up two and down six basis points,            Accounts managed by Calvert Investment Management, Inc.
                                                     may or may not invest in, and Calvert is not recommending
  respectively, to 0.29% and 1.58% by midday         any action on, any companies listed.
  Friday. Credit spreads were largely unchanged,
  with the Barclays US Corporate High Yield          The statistics have been obtained from sources believed to be
                                                     reliable, but the accuracy and completeness of this
  Index reporting average spreads at 662 basis       information cannot be guaranteed. Neither Calvert
  points over comparable Treasury yields.            Investment Management, Inc. nor its information providers
                                                     are responsible for any damages or losses arising from any use
 Spain’s mounting banking problems                  of this information.
  compelled the government to seek a €100            Calvert Investment Management, Inc.
  billion bailout on June 9. Despite the aid,        4550 Montgomery Avenue, Bethesda, MD 20814
  Moody’s cut the country’s credit rating by         (CIO061512)
  three levels to Baa3. Spanish yield’s soared
  back up toward historic highs with the 10-
  year bond hitting 6.87%. This Sunday’s
  election in Greece will also set the tone for
  whether Greece exits the euro. European
  central banks have tried to calm markets
  ahead of the election by confirming their
  ability, and willingness, to inject any needed
  liquidity into the markets.

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