The weekly Initial Jobless claims are the primary mover of rates this morning. It was predicted that 315,000 to 320,000 employees would file for first time unemployment insurance; 342,000 did. Not only is that above predictions, it is higher than last weeks 321k. As an inverse indicator this higher number is bad for the economy. Bad for the economy = good for rates.

Import Prices were also indicated lower inflation. The expectations were +.05% to +0.9%. The Department of Commerce reported that Import prices were +0.3%.

Export Prices seldom influence rates and had no estimates this month. The Department of Commerce reported Export Prices at +0.6%.

TOMORROW, 13 APRIL 2007

The big item for Friday will be the Producer Price Index (PPI) and core-PPI. The PPI looks at inflation at the wholesale level. Core-PPI looks at the same only it excludes the more volatile food and energy costs. Both have had a recent history of being lower than the anticipated number, which was true at least possibly until this month.

PPI is expected to be a bit lower than last month’s report when it was reported at 1.3%. It is predicted to be +0.6% to +0.9%. Core-PPI is the more important of the two items. Estimates are +0.2% from all sources. Last month core-PPI was +0.4%.

PPI is the most important of Friday’s data, but not the only important one. It is also not the only volatile one. The University of Michigan publishes its Consumer Sentiment Report. Bond traders and investors pay very close attention to it. Last month’s final number was 88.4. It is expected to be 87.0 to 88.0

Trade Balance seldom has an effect on rates. The bond market is looking for a $60.0 to $61.0 reading which is higher than last month’s $59.1.

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