The 10-year Treasury traded flat but just below yesterday’s close for most of the day. About one hour before closing the 10-year Treasury closed down -.020% with the rate closing at 4.944%.

Last week’s UBS Store Sale Index surprised the bond market by showing some strength in retail sales. This week’s report was -0.2% in weekly analysis and 3.0% over the same week last year. It is possible that that return to a lower reading moved rates a little lower at the opening.

The Redbook Retail Survey was also a bit lower at 3.0%

At 09:00 the State Street Investor Survey was reported at 87.0. That was considerably lower than 97.2. This caused the DJIA and the S&P 500 to drop for the day.

Money flowing out of the stock market found its way into the bond market which was one of the primary rate movers today.

SHORT-TERM OUTLOOK [23 July 2007]

Wednesday is the first day of the week an important item is released; Existing Home Sales. Existing Home Sales are expected to be 5.85m to 5.97m. There are some sings that the actual number will be lower. That would be good for rates.

The MBA Purchase Application Index is published at the markets opening. There are no estimates for this, but it can move the bond market on occasion.

The FED’s beige book is out at 13:00cdt {1:00pm, 18:00gmt}. It is rare that this will affect rates, but when it does it moves rates hard.

Thursday does have the Durable Goods Orders which can impact rates. The New Home Sales number is published. The weekly Initial Jobless claims may move rate the way it did last week.

Unlike last week, this Friday has some valuable numbers out. The first read of last month’s GDP and the attached Chain Deflator. The U of Mich. Consumer Sentiment Report is also published.

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