The bond market is mostly flat despite rates moving downward in early morning trading.

Much of this morning’s data came in as expected, with one exception that was ignored. So, investors have little to trade on other than flights to safety, or flights from safety.

MarketWatch quoted Tom di Galoma, head of U.S. Treasurys trading for Jefferies & Co. He said, “Investors really aren't looking at the data. At this point, the environment is all about risk reduction."

For the most part, traders and investors have mirrored the activity of the Stock Market’s NASDAQ Index in late morning trading. Early in the morning the benchmark bond was -.025% with the rate at 4.706%. At this time, the 10-year Treasury is at -.010% with the rate at 4.722%.

Many of the economic figures were important, but not far enough from the expectations to influence interest rates.

The most important was the CPI, and the core-CPI. The headline Consumer Price Index was forecast at +0.1% to +0.2%, and prices were reported at +0.1%. The more important core-CPI, which excludes the volatile energy and food costs, was expected to be +0.2% and did exactly that, increased +0.2%.

The New York Empire Index was the surprising number this morning. The index of manufacturing was expected to be 15.0 to 19.0. The NY FED reported their index at 25.1. Obviously it was ignored.

The Industrial Report is very important and can move rates, though it did not today. The Industrial Production was predicted to be +0.2% to +0.4%. It was found to be right in the middle at +0.3%. The Capacity Utilization was 81.9%. This was just above the anticipated 81.7% to 81.8%.

Yesterday 13 August post close report:

The rate on the 10-year Treasury continued to lower as it had in late morning trading. For the most part, bonds trended with the stock market. The 10-year Treasury closed -.046% with the rate at 4.732%

SHORT-TERM OUTLOOK [26 July 2007]

Thursday, August 16, 2007

8:30a.m. Initial Jobless Claims. Expected: 310k to 315k Previous 316k

8:30a.m. July Housing Starts. Expected: 1.40 to 1.415. Previous: 1467

8:30am Buildin Permits Expected 1.39 to 1.420. to Previous 1.413 k

10:00a.m. DJ-BTMU Business Barometer.

12:00p.m. Aug Philadelphia Fed Business Index. Expected 8.0 to 10.0 Previous: 9.2.

Friday, August 17, 2007

Mid-Aug Reuters/U Of Mich Sentiment Index. Expected 87.0 to 88.5 Previous: 90.4.

Steve Boxmeyer [612] 799 – 6858

steve@LendWithIntegrity.com