Rates were pretty flat at this mornings opening, and have remained flat. There are no economic events while the bond market is open. The market will probably remain flat.

There are some Treasury auctions scheduled all Monday. Treasury auctions occur every Monday. It appeared the 10:00cdt {15:00gmt} may move rates higher, but it was a temporary and small upward shift.

Prior to the 10:00cdt {15:00gmt} 4-week T-Bill auction the 10-year Treasury was at 4.628%, which was down -.012% from Friday's close.  It went up just over Friday to be +.002%.  Currently the 10-year Treasury is -.002% with the rate at 4.638%.

Consumer Credit is published at the same time as the market closes. It is predicted to be +$4.0B to +$5.0B. Since it is published after the market closes it is clear that it will not influence rates. What is surprising, even though it is a very important item, it almost never moves rates the next day.

TOMORROW, 08 March 2007

Wholesale Inventories are released at 09:00cdt {14:00gmt}. This is an inverse indicator. A number higher than the expected +0.3% to +0.5% will be seen as bad for the economy. Bad for the economy = good for rates. The same holds true if it is below the predictions.

There are other figures out, but none have predictions. Regardless, the bond market will probably be quiet in anticipation of the FOMC meeting Wednesday afternoon. (See short-term outlook.)

[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 [07 May 2007]

Next week is a decent week in terms of the importance of economic events and the affect of rates. Monday is light in data. Tuesday is when the Wholesale Inventories are published. Thursday is heavy with international trade data as well as the Treasury Budget. Finally, Friday contains the Retail Sales numbers and the Producer Price Index figures.

The heaviest day will be Wednesday with the FOMC Meeting and the Policy statement at 13:15cdt {1:15pm, 18:15gmt}. It is our guess, and most everyone’s, that the FED will leave its very short term rates at the current level of 5.25%.

The question will be which way the bias goes. The bias is simply the FEDs guess as to the mid & long term direction they will probably move the Fed Funds rate. The rate of growth in the economy is slowing. At the same time inflation has not slowed down yet. (We will post a long-term outlook on this soon.) Still, we think there is the likelihood that the FEDs bias will be towards lowering rates. Bernanke has often said that he still sees inflation, but there are sings it could slow soon.

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