Rates closed at the highest level in three and a half months. This was based on diminishing hopes that the FED will lower the short-term rates anytime soon.

There were some very light data, and it is doubtful that any of the items impacted rates at all. Most of them indicated some slowing. None had any expectations, it is not possible that any surprised the bond market.

Two weekly sales numbers were UBS Store Sales which was -1.5% in week to week comparison, and +1.9% in year to year. That makes it appear that we may have lower retail sales numbers next time they come out.  Redbook was +2.0 verses last weeks +2.5.

Two indicators look as if the business sector is improving. The State Street Investors Survey was 9.9 verses last months 9.7. The Richmond FED survey was -10.0 instead of last month’s -11.0.

Finally, the ABC/Washington Post Consumer Confidence Survey lowered some to -9 from -7.

Given that most of these less than important items showed a slower economy one must question why the 10-year Treasury closed +.043% with the rate at 4.831%, the highest since 02 February. Prices, which move in opposite direction from rates were -11/32 to 97-13/32.

The driver for rates were comments by Richmond Fed President Jeffrey Lacker. Mr. Lacker said that inflation remains his tom concern. He dismissed much of the data suggesting inflation is moderating.

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