The 10-year Treasury is -.023% at 4.722%

There is next to no significant data this morning, There were two weekly private sector sales surveys and both have been trending upwards lately. The UBS Store Sales was +0.9% in week-to-week comparison, and +4.0% in year-to-year analysis. Redbook Store Survey is +4.9% in its year-to-year look.

TOMORROW, 11 April 2007

By far the biggest mover of the day will be released at 13:00cdt {1:00pm. 18:00gmt}. The FOMC Minutes have a history of dramatically impacting rates. At times it moves rates dramatically both ways in one day. The FOMC Minutes summarize what was said, and voted on during the FED’s last meeting of the FOMC.

We have some concerns of the direction that the Minutes will impact rates. Once again, it could be both. Some concerns are expressed in the Short-Term Outlook below. When the FOMC last met the bond market took and ran with the absence of one thing; a mention of rate tightening. The bond market went wild and rates move .073% in intra-day trading, closing at 4.518%. Within the next few days the bond market has corrected those rates and has been higher since then.

The big question; will the bond market again notice that the tightening bias is missing? Or, will the bond market see more inflation warnings? Will the correction be sufficient and rates trade flat tomorrow? Or will the answer to all three be, yes? Or guess is the latter.

[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.]

SHORT-TERM OUTLOOK [09 April 2007]

Bonds could be quiet for most of this week, as most of the economic events for this week are of low importance, and few surprising events.

Monday contains some Treasury Auctions which only rarely surprise the bond markets.

On Tuesday the bond market opens with the UBS Store Sales, and the Redbook Retail Survey.

Wednesday has a very powerful event; the FOMC Minutes. The FED is not convinced that inflation has been whipped. The commentary from FED official will be of concern for rates. We need to consider that when the FOMC minutes are released on 11 April 2007.

The majority of economists seem to see the FED on hold for the next few months. That could be good given that the bond market has a desire to keep long term rates below the FED-Funds rates.

Steve Boxmeyer [612] 799 – 6858
steve@LendWithIntegrity.com