Yesterday, 23 May 2007

Bonds continued their sell off on Wednesday afternoon as Richmond Fed Gov. Jeff Lacker continued to express his concerns about inflation on Wednesday.

Kevin Giddis of Morgan Keegan explained it this way to MarketWatch, “More and more Fed officials are saying that the FED needs to keep the funds rate the same and inflation must be the priority fight for the FOMC. The net result is panic selling and a lot of head scratching.”

The 10-year Treasury closed +.028% at 4.859%.

TODAY 24 May 2007

We are seeing more of the same in the bond market. The 10-year Treasury is +.028% to 4.887% in rate.

The bond market is responding to a better than expected New Home Sales Report. The market was expecting the 10:00 release to be 850k to 865k units sold. The Department of Commerce reported 981k units were sold.

The other two major items did not have a major impact on rates. The Durable Goods Orders was below the expected at 0.0% to +1.2%. The majority were looking for a +0.7% to +1.2%, only one source was looking for the 0.0%. It came in at +.6%

The weekly Initial Jobless Claims were in the anticipated 300k to 315k. The Labor department reported 311k workers filed for first time unemployment insurance.

Gasoline inventories were very low yesterday. The price at the pump is continuing to respond. The NYMEX Robb Gasoline Index has the price at +3.76 at 234.80.

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