The early morning did not look good for rates. The bond market reacted to a higher than anticipated Durable Goods Orders that was released at the opening. Analysts expected capital outlays to be +1.2% to +3.0%. The +1.2% guessers were uncharacteristically far out of accuracy. Purchases of everything from washing machines to 747s were +3.4% last month.

That higher than expected report moved the 10-year Treasury to a high of 4.656% which was +.034% higher than yesterday’s close.

At 09:00 New Home Sales for March were lower than economists thought they would be. Economists were predicting New Home Sales to be 885k to 900k units. 858,000 units were actually sold which was higher than February, but still under expectations.

That brought rates on the benchmark 10-year Treasury down to 4.618% which was fairly flat from yesterday. At that time it was -.002% below Tuesday’s close. Since that time, rates have inched back up +.008% to make the yield on the 10-year Treasury 4.632%.

The bond market is paying a little bit more attention to Durable Goods. A portion of Durable Goods is orders that have not yet been filled. Because it is a more forward looking indicator than New Home Sales, it carries more weight.

TOMORROW, 26 April 2007.

There are only two items published on Thursday. The one at the opening, the weekly Initial Jobless Claims, is of moderate importance, and can occasionally move bonds.

The other, the Help Wanted Index, is of low importance, seldom influences rates, and is published at 09:00cdt {14:00gmt}. However, it can be instructive of the condition of the job market. Expectations match last month’s reading of 31.

Prior to the Help Wanted Index, the weekly Initial Jobless Claims will be published at the markets opening. Analysts are predicting 325k to 329k employees will file for first time unemployment insurance. That is lower than last weeks 339k. This is an inverse indicator. A lower than predicted number is good for the economy but bad for rates, and vice versa.

In all likelihood, the bond market will ignore the economic data and prepare for Friday’s big numbers. The 1^st quarter GDP Report will be made public at the bond markets opening on Friday.

[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