This blog’s newest feature is the BoxGuess. The BoxGuess is a short-term technique to see if the range of expectations will be above or below the actual. The methodology is a secret and will not be made public.

It is still under development!

Warning: The BoxGuess is theoretical at best. The author is using this blog to test the effectiveness of the BoxGuess. You can do the same. If you use this blog to test the effectiveness of the BoxGuess you do so at your own risk.

For the past few weeks this blog has been testing the BoxGuess technique in complete secret. I worked for today’s Existing Home Sales. It was expected that 5.85m to 5.92m used homes were sold in June. In fact 5.75m were sold. That was lower than the expected. That caused rates to move lower.

The 10-year Treasury opened low prior to Existing Home Sales. The 10-year Treasury opened at 4.929% down -.015% from yesterday’s close. Shortly after that the benchmark bond moved close to yesterday’s close. The price recovered closer to the opening price.

Once the Existing Home Sales number was release the 10-year Treasury moved as low as -.042% with the 4.902%.

Rates also moved lower because of weakness in the stock market.

There has been a small amount of profit taking since then and the 10-year Treasury is at 4.911 which is -.033% lower than Tuesday’s close.

The MBA Purchase Application Index was lower than last week at 424.2. Last week it was at 446.5, with the 4-week moving average at 441.65. The 4-week moving average is significant, and was only slightly lower this week at 440.48. It is unlikely that bonds were affected by this item.

SHORT-TERM OUTLOOK [23 July 2007]

On Thursday the Durable Goods Orders is forecast to be 1.5 to 2.5 which can impact rates. The BoxGuess indicates it may come in above the forecast amount.  That may not be good for rates.

The BoxGuess indicates that the other two itmes; Jobless Claims and New home Sales will both be at the high end of the expected results, but probably not enough to influence rates.

The weekly Initial Jobless Claims if expected to be 310k to 311k.

New Home Sales are predicted to be 890k to 900. It will probably come in just at the high end.

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