Posted by
boxflyz About Econ on Friday, March 30, 2007 12:39:07 PM
R
ates were higher this morning as they have been trending all week. All of today’s economic data was higher than expected, with the exception of Consumer sentiment. According to the wires and analysts the only mover of rates is the Chicago PMI. It is without a doubt the primary mover, but we do not feel it is the only mover. At one point the 10-year Treasury was as high as 4.672% which was +.040% higher than yesterday’s close.
The market opened with the Personal Income and Personal Spending. Both were expected to be +0.3% by all the analysts. Both numbers were +0.6%. It is rare that both numbers and the expectations are out in complete agreement like this. Regardless, it is our view that Personal Income and Personal Spending influenced rates, albeit not to the degree Chi PMI. We look at the trading graph there was an affect before Chi PMI came out.
Chicago PMI was far higher than anticipated. Economists were expecting a 49.0 to 50.0 reading. The actual number was far higher at 61.7. It was released at 09:45 EDT {08:45 CDT, 13:45 GMT} and rates moved up at that time.
Construction Spending was also higher than the expected -0.3% to -1.0%. Construction Spending was +0.3%. This also moved the market up. It was released at 10:00 EDT {09:00cdt, 14:00gmt}.
Residential Construction Spending is not noticed often by the bond market, but it is important to our readers. This could be interpreted as a negative for real estate, but it really is good news as it will reduce inventory
Last, the University of Michigan’s Consumer Sentiment Survey was out at 09:00 and was reported at 88.4; which was just a bit lower than the 88.5 to 88.8.
Rates have since turned its direction. The price on U.S. Treasuries rose causing rates to go down as investors take a flight to safety. Bloomberg has reported: “(An) unconfirmed report that U.S. military officers advised American investors to leave Bahrain amid a standoff between the U.K. and Iran.”
Rate on the 10-year Treasury are -.002% to 4.630% We commented on this situation on 27 March and predicted the possibility of this even impacting rates.
There are several reasons why the bond traded the way it did this morning. We will post on that tomorrow, it will be a great learning moment. Be sure to look it up. We will also post on Monday tomorrow afternoon.
[Publisher’s note: In an attempt to clean up our blog, we will post all three outlooks on Monday only. We will post an outlook on days when one is modified.]
Steve Boxmeyer [612] 799 – 6858 steve@LendWithIntegrity.com