Bonds did react some to the publication of the FOMC Minutes, Though not quite as much as they ought to have. The 10-year Treasury closed +.015% with the rate at +4.739%. The benchmark 10-year Treasury was -.010% just before the FED made the FOMC Minutes public. The Minutes did cause a +.025% intraday trading.

The minutes are very hard to get a read of the FED’s direction this time. Some analysts see the Minutes pointing toward both a slowing of the economy and inflation increasing. That is a situation called ‘stagflation’. That is only a few of the analysts. Most are thinking that the minutes indicate some inflation threat still present, but not all that bad. We will be reading commentary further and hoping to be able to give our opinion soon.

We erred this morning in missing an economic item; The Mortgage Bankers Association (MBA) Purchase Application Index. It is seldom noticed by the bond market, but it can give very good indication where the real estate sector is moving. The week-to-week MBA Purchase Index was at 413.0. This is the highest single weekly indicator since 17 January, 2007. As important, it moved the 4-week average up from last week’s 409.73 to 413.06. That could be good news for the majority of our blogs readers who are directly affected by changes in the real estate industry.

At the same time other items in the Real Estate Sector are looking bad. The National Association of Realtors projected that existing home sales will fall 2.2% this year to 6.34 million, and estimated, for the first time ever, a decline in the median national selling price for existing homes, as many borrowers are finding they’ve got debts no honest man can pay. The stock market saw Homebuilders stock perform accordingly, Homebuilders were the day’s worst performers, dropping 1.9%.

TOMORROW, 12 March 2007

Import & Export Prices are circulated at the market’s opening. There are no predictions for Export Prices, and it never seems to impact rates. Import Prices can influence rates on the other hand. Economists are expecting a growth of +0.5% to +0.9%.

The weekly Initial Jobless Claims is also made public at the bond market’s opening. Analysts are predicting a slightly stronger job market, looking at 315k to 320k growth. Last week 321k workers filed for unemployment insurance.

We really have no guess which way that these two will impact rates tomorrow. The FOMC Minutes may still as analysts spend the night doing what we will be doing. We all will be reading the minutes and each other’s comments to try to figure out what the FED is saying.

[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