Rates closed very low today. The First economic item out was the NY Empire Index. On the surface it should have caused rates to move much higher. It was forecast to be 17.0 to 18.4. The NY FED published it at 26.46. The devil (angel in this case) was in the details. The NY FED’s report showed a drop in prices paid by businesses.

That kept the 10-year Treasury -.010% to -.020% from Friday’s close.

Around 11:00cdt {16:00gmt} the 10-year Treasury’s price continued to move up, causing rates to drop. Eventually, the 10-year Treasury closed -.066% with the rate at 5.041%. The price was +13/32^nd moving the price to 95-26/32nds.

There were two major reasons for this. First and most important is the shrinking US Government’s deficit. The projected 7 percent increase in tax revenue – that is an increase in revenue not deficit – will help the U.S. budget deficit shrink by 17 percent to about $205 billion for the fiscal year ending Sept. 30.

Commentary: How can that be?!?! President Bush cut taxes. How did Revenue increase?!?!. Fact is, revenues increased when President Kennedy cut taxes. Fact is, revenues increased when President Reagan cut taxes. Fact is, revenues increased when President McKinley(?) cut taxes.

Treasury prices also rallied Monday, pressing yields lower, after an index that measures weakness in the subprime mortgage sector showed further deterioration of loans made in late 2006.

The ABX "BBB" 07-1 index, which gauges risk in the subprime mortgage lending industry, sank to near-record lows in midday trade, amid persistent worries about deteriorating loans in that industry

SHORT-TERM OUTLOOK [16 July 2007]

We are continuing to see some volatility in the bond market. Bond traders and investors are trying to find their footing.  Any important data will give them reason to feel around even more.

A trading range has seemed to emerge around the 5.100% level on the 10-year Treasury. The floor is around the psychological 5.000%. The ceiling looks as if it is just above the Fed Funds rate at 5.250%. The recent high occurred on 12 June at 5.297%. The low around 5.040% has been tested on a few occasions, most recently today.

There are some heavy data items published this week. Many days have more the one item.

Among the important statistics is Tuesday’s Producer Price Index (PPI) and the core-PPI, published at the opening bell. PPI is anticipated to be below last month’s report of +0.9%, with expectations of +0.1% to +0.2%. Core-PPI is expected to match May’s number at +0.2% across the board.

Tuesday also has the very significant Industrial Report which includes Production and Capacity. The Industrial report is out at 08:15cdt {13:15gmt}.

Production measures how much is coming out of the nations factories, mines etc. It is usually an inverse number, a higher than the forecast +0.3% to +0.6% may be good for rates. That does not mean that it indicates a slowing economy in this case. It means that there are more goods chasing the same dollars. That is an anti-inflationary thing.

Industrial Capacity is not an inverse number. It measure what percent of the factories, mines, forests etc. are being used. Anything above 80% is seen as inflationary since new factories need to be built, which means the more dollars chasing the same supply. We could have a bad day for rates if this is higher than the 81.5 to 81.6 predicted.

Net Foreign Purchase is out fifteen minutes before the Industrial Report, but is only seen as low importance and will most likely not affect rates.

The UBS Store Sales Index and Redbook Survey’s are also out in early morning, but are seldom noticed by traders or bond investors.

The NAHB’s Housing Index is published at 12:00cdt {17:00gmt} and has impacted rates recently. There are no estimates for this item.

Also at 12:00 Kansas City Federal Reserve Bank President Thomas Hoenig (an FOMC voting member) is scheduled to speak about monetary policy & the U.S. economic outlook, in North Platte, Nebraska. Audience Q&A possible

Wednesday’s market opening sees the very important Consumer Price Index. Along with the CPI is the recently important Housing Starts and Building Permits numbers.

Thursday starts to quiet down in the morning with the weekly Initial Jobless Claims, the Leading Economic Indicators, and Philadelphia Fed Index.

The activity in the afternoon picks back up with the release of the FOMC Minutes.

There is no significant data on Friday.

MID-TERM OUTLOOK [2 July 2007]

There are a few bright spots and some dark spots for rates for the next few months.

First, the good news. But remember, good news for rates often means bad news for the economy.

A.) On 26 June the Consumer Confidence was slightly below expectations. This could give us strong indication for the mid-term direction of rates. Analysts were looking for 105.0 to 106.0. The Conference Board released the number at 103.9.

Lynn Franco, Director of The Conference Board Consumer Research Center said, "A perceived softening in present-day business and employment conditions are the major reasons behind this month's pull-back in confidence. In fact, the Present Situation Index now stands at levels not seen since the final quarter of last year. Looking ahead, consumers remain rather subdued about short-term economic prospects. All in all, the glass remains half empty and half full."

Consumers' appraisal of present-day conditions was less upbeat in June. Those claiming conditions are "good" declined to 27.4 percent from 29.0 percent. Those saying conditions are "bad" increased to 16.4 percent from 14.6 percent. Consumers were also less positive about the job market.

B.) The softness in consumer sentiment may be what has driven the decline in both the Redbook and UBS store Sales in the last few months. To date, the decline in both of these weekly numbers have not affected the more important Retail Sales Report.

C.) Investor Sentiment may be, repeat, MAY BE changing. (‘May be’ cannot be emphasized enough.) The floor-ceiling range mentioned in the Short-Term Outlook has occurred in the last 5 weeks. When the floors and ceilings are tested – which simply means that rates get close to that top and bottom – the bottom has been tested more often that the top. What’s more, rates have been tending to hover at the lower end of the range.

On the negative side:

1.) While investor sentiment may be getting ready for a turn, investor sentiment still leans towards higher rates. The bond market has been in a selling mood since 10 May 2007

A few months back this blog wrote that the bond market seemed to be looking for any excuse to buy bonds and thus drive rates lower. That trend has reversed itself. The bond market is now looking for any reason to sell, and correspondingly raise rates.

On 31 May 2007 there was one such example. There were six items published that day. Even though most of the economic items came in as expected, three did not. Of the three, two were lower than expected and should have moved rates lower. Instead rates continued their upward trend. Clearly, investor sentiment has turned bearish on buying bonds.

Investors are becoming bearish and are starting to realize that inflation exists. They are starting to see that the FED is more determined fight inflation. More and more FED officials are making hawkish comments.

One additional argument that investor sentiment is for higher rates happens on days when there is no data. It has only happened 4 times since 10 May. Two times the bond market was flat, two times it was up some.

2) The housing bubble has ‘burst’. Will housing continue to decline? Is it flattening? Or, is it on the verge of a rebound? The data over the last few months has been a resounding maybe to all three.

IF homeowners start to see a rebound in housing their confidence will increase. As confidence increases, so will spending. Economic growth is moderate now with problematic inflation. Strong growth could renew strong inflation.

The slide in Real estate has not yet seemed to affect retail sales or consumer confidence. Inflation hawks can’t win for losing.

On 08 May 2007 the bond market responded to an unscheduled announcement by the National Association of Realtors (NAR). The NAR reduced its sales forecasts for 2007 and 2008, predicting that stricter lending standards would limit home buying. That only makes sense as stricter guidelines reduce the number of buyers able to get a mortgage. Given the current oversupply of houses, verses the very number of buyers we have a buyers market now as it is. Reducing the number of buyers hits the real estate market with a double whammy.

Sales of existing homes will probably fall about 3% this year to 6.29 million from 6.48 million in 2006. Sales of new homes are projected to fall about 18% to 864,000, compared with a 14% drop predicted last month. Housing starts are expected to drop 19% to 1.46 million.

When there are signs of housing market weakness it helps the price of bonds. Since it is a sing of a slowing economy it instills safe-haven interest.

At the same time, and on the other hand, the bond market seems to have discounted the housing bust. That means that yes, they know that housing is in trouble. They are guessing it will be in trouble for at least the Mid-Term, if not the Long-Term. The bond market has included (which is what economist have in mind when the word ‘discount’ is used) the housing slump into the price. Both bond traders and analysts will need to see a big change in the housing market one way or another before a new rate trend will be established based on residential real estate.

3) The US and the global economy appear to be in recovery. This has to be the shortest, least felt ‘recession ever experienced. (The 2.2% main stream media aside, there never was a recession; GDP never went below 0.0 %.)

A major part of the growing global economy is China. On 12 June, the Chinese consumer price index for May was +3.4% in year-to-year analysis, according to data published by the [Chinese] National Bureau of Statistics. Most of the gains were due to food prices, and haven't spread to a broad range of consumer goods. What we would call Chinese core-CPI was +1.0%. China’s food prices jumped 8.3% from a year ago.

Even though Chinese core-CPI was low, the headline inflation rate is now higher than the interest rate banks pay on deposits, currently set at 3.06% for one year. That gives Chinese consumers a big incentive to spend or invest that money rather than let it sit in the bank.

Further, and of great Long-Term bearing on US interest rates – is how this will diminish demand for US Treasuries. When demand for any commodity decreases, the price also declines. When bond prices deteriorate as they have, rates go up.

4) In February this blog wrote:

“We have one great inflation fear in the mid-term; corn prices. With all the talk of alternate fuel and ethanol, corn futures have nearly doubled. Corn is a staple of most food products that we eat. Increases in corn prices will not just impact corn flakes, but pop/soda, beef, and pig, chicken, candy bars, just about anything we eat.”

Grain stockpiles in many countries have fallen to multiyear lows, even as increased production of biofuels such as ethanol has added a new source of demand.

Commentary: Even the best estimates of corn based fuel say that it will never replace the need for fossil fuels. At best it can only reduce the demand some. It would be much better for us to reduce our demand on foreign oil and decrease the price at the pump by; 1.) Drilling where we know that there is oil, 2.) Build refineries, 3.) Eat food as food.

Steve Boxmeyer [612] 799 – 6858

steve@LendWithIntegrity.com

Yesterday, 11 July 2007

According to MarketWatch, “A couple of Fed officials (Fed Governor Kevin Warsh and Philadelphia Fed President Charles Plosser) addressed concerns over mortgage-related debt by saying that the economy and the markets were well disposed to absorb the negative impact of the situation.”

The comments by these two FED officials is good news for the economy overall, but that was bad for rates. The 10-year Treasury closed +.042% with the rate at 5.080%. The price – which moves in the opposite direction of rate – was -15/32nds to 95-15/32nds.

TODAY

Treasury prices move lower Thursday in mid morning trading. This price move sent yields higher. Investors overlooked U.S. jobless data and fixated on the potential ramifications of subprime credit woes highlighted by a spike in foreclosures in June.

The weekly Initial Jobless claims were lower than expected at 308k. The market was looking for 312k to 315k. This lower than expected number is good for the economy; which is bad for rates.

The Trade Balance was as forecast at -$60.0B.

The concerns over foreclosures are pushing rates upward. The 10-year Treasury is +.031% with the rate at 5.111%.

What is up for tomorrow.

Friday opens with the Retail Sales Report, and Import Prices. Two other items are out in the morning. All of Friday’s item can move rates.

Total Retail Sales are predicted to be 0.0% to +0.3%, much lower than last month’s 1.4%. Core Retail sales which exclude food and auto are forecast to be +0.2% to +0.4%, also lower than last month’s 1.3%. Those low numbers are reasonable given the low trends we have seen in the UBS Store Sales, Redbook Survey, and store sale reports.

Import Prices are an important measure of inflation and the bond market does pay attention to them. The are expected to be +0.6% to +0.7%.

About two hours into trading sees the Business Inventories report and the prelim-Michigan Consumer Sentiment Report. Business Inventories are anticipated to be slightly lower than last month’s +0.4% at +0.3%.

The U of Michigan publishes an index of how consumers feel about the economy. Analysts are expecting it to be 82.5 to 86.0; roughly straddling last month’s 85.3.

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

There are two FED speeches this morning and next to no data of any significance out this morning. Rates are higher in mid-morning trading with the 10-year Treasury +.031% and the rate at 5.069%.

Two unimportant items – as far as the bond market is concerned – were released as the market opened. Even though the bond market ignores the Mortgage Bankers Association’s two indexes, they are often important to readers of this blog. The more important is the MBA Purchase Application Index. Its week-to-week number is mostly flat at 442.75 verses the previous week’s 445.45. The weekly number was near one of its high at 453.9.

The MBA Refi Index was +1.1% verses last week’s -2.6%.

The two FED speeches this morning are:

It is possible that Kevin Warsh’s testimony is influencing rates, but it has not yet hit the wires. This blog will update later if his comments did move bonds this morning.

Until and if that is the case, we need to assume that this mid-morning’s rate move is simply technical in nature as traders take their profits.

COMING UP THE REST OF THE WEEK:

Jobless Claims and the Trade Balance are published at the market’s opening on Thursday. The weekly Initial Jobless number is forecast to at 315k, lower than last week's 318k.  The Trade Balance is expected to have a deficit of -$60.0B to -$60.2B.  The T-Budget is out in Mid-day and is believed to show a balance of -$25B to -$31B. The first two can influence rates frequently, the T-Budget can occasionally.

There are two FED speeches, but both are after the market closes and may affect rates on Friday, but there is important items out in the morning.

Friday opens with the Retail Sales Report, and Import Prices. About two hours into trading sees the Business Inventories report and the prelim-Michigan Consumer Sentiment Report. All of these items can move rates.

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

The bond market responded by strengthening the rally. The 10-year Treasury closed with the rate -.121% ant the rate at 5.038%. That rate is approaching the 5.000% psychological floor. The price on the benchmark 10-year moved almost a whole point, closing +29/32 to 95&30/32nds.

{11:14cdt, 16:41gmt}

Rates are much better this morning as the bond market is experiencing a buying spree. The activity is not based on any of the economic data out at this time. The price on the 10-year Treasury is at 95&20/32nds which is +19/32nds over yesterday. The important thing for our readers is the rate; which always trades in the opposite direction from price. The yield on the 10-year Treasury is 5.071%, -.088% from Monday.

Wholesale Inventories may have caused a very small amount of the bond boom, but not nearly the amount we have this morning. They were predicted to be +0.3% to +0.4%, at or a bit higher than last months +0.3%. The actual number was +0.5%. This is in inverse indicator; a higher number is bad for the economy. Bad for the economy = good for rates. Even so, this little bit off target does not account for the impressive gains in the bond market.

The bond market completely ignored yesterday's Consumer Credit. It was anticipated to be +$5.6B to +$7.0B. Consumers borrowed +$12.9B in May. This should have caused bond investors to be concerned with increased demand for lending money, and thus increased rates.

This mornings price (and rate) on the bond market has been driven after Standard & Poor's said it may cut credit ratings on $12 billion of bonds backed by subprime mortgages. This raises concern among investors that the housing weakness may slow the U.S. economy.

An article in Bloomberg by Deborah Finestone and Daniel Kruger said this:  “The fear over subprime issues is huge,'' said Thomas Roth, head of U.S. government bond trading in New York at Dresdner Kleinwort, one of the 21 primary security dealers that trade with the Federal Reserve. ``Every time credit spreads go up, people buy Treasuries.''

Yet to come today: FED Chair Ben Bernanke delivers an address on inflation today around noon. Given the topic, and who is giving the speech, and the market’s questions on the FED’s views of the topic, it will have an impact on interest rates, it could turn the direction of rates. There will be comment on this in a post this evening.

SHORT-TERM OUTLOOK

Wednesday has few items and the bond market will possibly make some adjustments from Tuesday. The early morning sees the release of the Mortgage Bankers Association two weekly indexes; the Purchase Application Index, and the Refi Index. Both are largely ignored by the bond market, the Refi is completely ignored.

There is an important speech tomorrow. Philadelphia Federal Reserve Bank President Charles Plosser to speak about housing prices and U.S. monetary policy, at the European Economics and Financial Centre seminar, in London. Audience, media Q&A expected. The speech will be given at 10:00cdt {16:00gmt}. The bond market will pay attention given today’s news on the home financing.

Federal Reserve Governor Kevin Warsh (FOMC voting member) and Treasury Under Secretary for Domestic Finance Robert Steel will testify at a House Financial Services Committee hearing on hedge funds and systemic risks, in Washington. This will also be at 10:00cdt. It will probably have no affect on rates, but there is no guarantee on that.

Jobless Claims and the Trade Budget are published at the market’s opening on Thursday. The T-Budget is out in Mid-day. The first two can influence rates frequently, the T-Budget can occasionally.

There are two FED speeches, but both are after the market closes and may affect rates on Friday, but there is important items out in the morning.

Friday opens with the Retail Sales Report, and Import Prices. About two hours into trading sees the Business Inventories report and the prelim-Michigan Consumer Sentiment Report. All of these items can move rates.

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

Rates are coming in a bit lower this morning in the absence of any economic data. The only item out today is the Consumer Credit Report this afternoon (see Short-Term Outlook below).

The rate on the 10-year Treasury is 5.161% which is -.034% from Friday’s close. Rate movement last week was bad. Today is simply

MarketWatch said the following. “Treasurys [prices] traded mildly higher Monday, pushing yields lower, as bargain hunters stepped into the market in the wake of price declines last week that left benchmark yields at two-week highs.”

SHORT-TERM OUTLOOK [2 July 2007]

We have seen some volatility of late as bond traders and investors attempt to find their footing. Any important data will give them reason to feel around even more.

A trading range has seemed to emerge around the 5.100% level on the 10-year Treasury. The floor is around the psychological 5.000%. The ceiling looks as if it is just above the Fed Funds rate at 5.250%. The recent high occurred on 12 June at 5.297%. The low around 5.080% has been tested on a few occasions in the short-term. Most recently was the day of this outlook.

There is not too much important data out this week, but there are some very big speeches with some real potential to move rates.

Monday presents only one important economic item; Consumer Credit. Despite its importance, it will probably have little impact on the bond market. Consumer borrowing is forecast to be $5.5B to $7.0B, higher than last month’s $2.6B. It is released at 14:00cdt {2:00pm, 19:00gmt} which is the same time that the bond market closes. It can occasionally impact rates in after market trading and in the next trading day. There is a very important speech on Tuesday and bond investors and traders will be looking toward that, ignoring all else.

FED Chair Ben Bernanke delivers an address on inflation Tuesday around noon. Given the topic, and who is giving the speech, and the market’s questions on the FED’s views of the topic, it will have an impact on interest rates.

Wholesale Inventories are published at 09:00cdt {14:00gmt} and can affect rates but it will most likely be overshadowed by Bernanke. It is predicted to be +0.3% to +0.4%, at or a bit higher than last months +0.3%.

Tuesday also will see the two private sector, weekly sales numbers; Redbook Survey, and the UBS Store sales number.

Wednesday has few items and the bond market will possibly make some adjustments from Tuesday.

Jobless Claims and the Trade Budget are published at the market’s opening on Thursday. The T-Budget is out in Mid-day. The first two can influence rates frequently, the T-Budget can occasionally.

There are two FED speeches, but both are after the market closes and may affect rates on Friday, but there is important items out in the morning.

Friday opens with the Retail Sales Report, and Import Prices. About two hours into trading sees the Business Inventories report and the prelim-Michigan Consumer Sentiment Index. All of these items can move rates.

MID-TERM OUTLOOK [2 July 2007]

There are a few bright spots and some dark spots for rates for the next few months.

First, the good news. But remember, good news for rates often means bad news for the economy.

A.) On 26 June the Consumer Confidence was slightly below expectations. This could give us strong indication for the mid-term direction of rates. Analysts were looking for 105.0 to 106.0. The Conference Board released the number at 103.9.

Lynn Franco, Director of The Conference Board Consumer Research Center said, "A perceived softening in present-day business and employment conditions are the major reasons behind this month's pull-back in confidence. In fact, the Present Situation Index now stands at levels not seen since the final quarter of last year. Looking ahead, consumers remain rather subdued about short-term economic prospects. All in all, the glass remains half empty and half full."

Consumers' appraisal of present-day conditions was less upbeat in June. Those claiming conditions are "good" declined to 27.4 percent from 29.0 percent. Those saying conditions are "bad" increased to 16.4 percent from 14.6 percent. Consumers were also less positive about the job market.

B.) The softness in consumer sentiment may be what has driven the decline in both the Redbook and UBS store Sales in the last few months. To date, the decline in both of these weekly numbers have not affected the more important Retail Sales Report.

C.) Investor Sentiment may be, repeat, MAY BE changing. (‘May be’ cannot be emphasized enough.) The floor-ceiling range mentioned in the Short-Term Outlook has occurred in the last 5 weeks. When the floors and ceilings are tested – which simply means that rates get close to that top and bottom – the bottom has been tested more often that the top. What’s more, rates have been tending to hover at the lower end of the range.

On the negative side:

1.) While investor sentiment may be getting ready for a turn, investor sentiment still leans towards higher rates. The bond market has been in a selling mood since 10 May 2007

A few months back this blog wrote that the bond market seemed to be looking for any excuse to buy bonds and thus drive rates lower. That trend has reversed itself. The bond market is now looking for any reason to sell, and correspondingly raise rates.

On 31 May 2007 there was one such example. There were six items published that day. Even though most of the economic items came in as expected, three did not. Of the three, two were lower than expected and should have moved rates lower. Instead rates continued their upward trend. Clearly, investor sentiment has turned bearish on buying bonds.

Investors are becoming bearish and are starting to realize that inflation exists. They are starting to see that the FED is more determined fight inflation. More and more FED officials are making hawkish comments.

One additional argument that investor sentiment is for higher rates happens on days when there is no data. It has only happened 4 times since 10 May. Two times the bond market was flat, two times it was up some.

2) The housing bubble has ‘burst’. Will housing continue to decline? Is it flattening? Or, is it on the verge of a rebound? The data over the last few months has been a resounding maybe to all three.

IF homeowners start to see a rebound in housing their confidence will increase. As confidence increases, so will spending. Economic growth is moderate now with problematic inflation. Strong growth could renew strong inflation.

The slide in Real estate has not yet seemed to affect retail sales or consumer confidence. Inflation hawks can’t win for losing.

On 08 May 2007 the bond market responded to an unscheduled announcement by the National Association of Realtors (NAR). The NAR reduced its sales forecasts for 2007 and 2008, predicting that stricter lending standards would limit home buying. That only makes sense as stricter guidelines reduce the number of buyers able to get a mortgage. Given the current oversupply of houses, verses the very number of buyers we have a buyers market now as it is. Reducing the number of buyers hits the real estate market with a double whammy.

Sales of existing homes will probably fall about 3% this year to 6.29 million from 6.48 million in 2006. Sales of new homes are projected to fall about 18% to 864,000, compared with a 14% drop predicted last month. Housing starts are expected to drop 19% to 1.46 million.

When there are signs of housing market weakness it helps the price of bonds. Since it is a sing of a slowing economy it instills safe-haven interest.

At the same time, and on the other hand, the bond market seems to have discounted the housing bust. That means that yes, they know that housing is in trouble. They are guessing it will be in trouble for at least the Mid-Term, if not the Long-Term. The bond market has included (which is what economist have in mind when the word ‘discount’ is used) the housing slump into the price. Both bond traders and analysts will need to see a big change in the housing market one way or another before a new rate trend will be established based on residential real estate.

3) The US and the global economy appear to be in recovery. This has to be the shortest, least felt ‘recession ever experienced. (The 2.2% main stream media aside, there never was a recession; GDP never went below 0.0 %.)

A major part of the growing global economy is China. On 12 June, the Chinese consumer price index for May was +3.4% in year-to-year analysis, according to data published by the [Chinese] National Bureau of Statistics. Most of the gains were due to food prices, and haven't spread to a broad range of consumer goods. What we would call Chinese core-CPI was +1.0%. China’s food prices jumped 8.3% from a year ago.

Even though Chinese core-CPI was low, the headline inflation rate is now higher than the interest rate banks pay on deposits, currently set at 3.06% for one year. That gives Chinese consumers a big incentive to spend or invest that money rather than let it sit in the bank.

Further, and of great Long-Term bearing on US interest rates – is how this will diminish demand for US Treasuries. When demand for any commodity decreases, the price also declines. When bond prices deteriorate as they have, rates go up.

4) In February this blog wrote:

“We have one great inflation fear in the mid-term; corn prices. With all the talk of alternate fuel and ethanol, corn futures have nearly doubled. Corn is a staple of most food products that we eat. Increases in corn prices will not just impact corn flakes, but pop/soda, beef, and pig, chicken, candy bars, just about anything we eat.”

Grain stockpiles in many countries have fallen to multiyear lows, even as increased production of biofuels such as ethanol has added a new source of demand.

Even the best estimates of corn based fuel say that it will never replace the need for fossil fuels. At best it can only reduce the demand some. It would be much better for us to reduce our demand on foreign oil and decrease the price at the pump by; 1.) Drilling where we know that there is oil, 2.) Build refineries, 3.) Eat food as food.

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

Stocks and bonds are responding to a predicted growth in the job market. While job growth was at the highest end of expectations, it was evidentially higher than the majority of investors and traders anticipated. This strength surprised traders and impacted rates upwards.

Yesterday’s ADP Report suggested that the payroll growth would be far higher than the forecast amount. Despite the ADP, economists held to their expected range of 125k to 135k new jobs added. The Labor Department reported that Payrolls grew by 132k. Looks like the ADP report was in the right direction, if not in the correct amount.

What pushed the bond market higher was the revision of what was reported in June. Previously the Labor Department thought Payrolls had advanced by 157k, but 190k jobs were added in May.

Other parts of the Employment Report were as anticipated. Unemployment was forecast at 4.5% across the board, the same as last month. Unemployment was 4.5%.

Hourly Earnings were predicted to be +0.3% to +0.4%. Hourly Earnings were the same as last month at +0.3%.

The average Hourly workweek was 33.9 hours, at the high end of the 33.8 to 33.9 guess.

The employment report has moved the 10-year Treasury to +.045% with the rate up to 5.189%

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

Rates are sharply higher this morning as guesses from bond traders are looking towards tomorrow’s Employment Report being stronger than predicted. Although not mentioned in many of the ‘wires’ the ISM-services report is also affecting rates.

ISM-Services was anticipated at 57.5 to 59.0, but was reported at 60.7.

The most important employment item was the weekly Initial Jobless Claims. But, is not getting a great deal of credit for moving rates today. It probably is not the biggest mover. It was predicted that 315k workers would file for first time unemployment insurance. The Labor Department actually reported that 318k filed.
That is obviously higher than the forecast and should have dropped rates far lower. But, economists say initial claims in the range of about 300,000 to 325,000 are consistent with job growth of about 100,000 to 150,000 per month. This is the first time that the bond market noticed this.
Consistent levels of Jobless claims atop the 350,000 mark would signal some weakening in the labor market, while a sustained drop below 300,000 could place further strain on a labor market that's already tight.

Occasionally the ADP Employment Report impact interest rates. ADP did that today. According to ADP the private sector payrolls grew by 150,000; the fastest rate in seven months. ADP does not include government jobs.

Tomorrow’s Department of Labor Payroll growth is currently forecast at 125,000 to 135,000. It does include government jobs. At this time, the concern for tomorrow's Employment Report is only coming from the bond market.  None of the sources this blog follows have changed their estimates for Payroll Job growth.  Therefore, it is probable that at least some investors will be wrong about the payrolls number. That will make tomorrow volatile.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, said ADP report confirms his expectations that payrolls will have increased by 150,000 in June.

"That said, the ADP survey has a record of occasional, but unpredictable, spectacular misses when compared to the official payroll numbers, so nothing is guaranteed," Shepherdson said.

Also, outplacement firm Challenger Grey & Christmas said U.S. corporations announced 55,726 layoffs in June, down 22% from May's figure and 17% below the figure from June 2006. The figures are not seasonally adjusted. June is traditionally a slow month for job-cutting announcements, Challenger noted

These items have all conspired this morning to move the 10-year Treasury +.077% with the rate at 5.127%.

The bond market almost always ignores the MBA Purchase Application Index. Readers of this blog still may take courage in this week’s results. It was 437.3, about average for the last couple of months. The 4-week average is holding steady at 445.45.

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

The bond market will be closing in the early afternoon at 13:00cdt {1:00pm, 18:00gmt} in honor of the Independence Day tomorrow. Obviously, all financial markets will be closed tomorrow.

This blog agrees with this holiday and with this closing. That may sound odd, but there are holidays that this author refuses to take. Labor Day is one such example.

Independence Day is one of the few ‘true holidays’. In these politically correct modern times it is almost exclusively called the 4^th of July. And this name refers to our nation’s birthday. Nothing wrong with that, but every nation has a birthday. Even monsters like N. Korea’s Kim Jung mentally Ill celebrates a national birthday.

Our nation is special. In the past the 4^th of July was also called Independence Day as it celebrated our freedom from the tyranny of King George III. But traditionally, it memorialized much more.

It represents a whole new view of government. Authority went from the king on down before 1776. After then it went from the people down. From then on, rights were not bequeathed from the king. They were ‘self-evident’.

Look at the change from just  an economic viewpoint. Imagine a man named Joshua. He invents the better mouse trap. Before 1776 Joshua would have to get permission from the King or governmental authority before selling his mousetrap. This is called mercantilism. Mercantilism can be trouble if the king’s friends make mousetraps.

A form of mercantilism is practiced in many nations to this day. Mexico is one such example. Many others are third world; not a coincidence. (Mercantilism and socialism often work hand-in-hand.)

After 1776 free market capitalism was instituted as law. (It was practiced in the 13 colonies prior to 1776.) In free market capitalism, Joshua would take his mousetrap to the marketplace without prior government approval. {Yes, Joshua can’t violate existing health & safety laws. Or copy someone’s patent or trademark.}

There is a reason that nations practicing free market capitalism economically beat the pants off mercantilists, communist and socialists.

Happy Independence Day!!!!


TODAY 03 JULY 2007

Factory Orders came in much stronger than what most analysts were predicting. Predictions ranged from 0.0% to -1.3%. Again, only one source was looking for the 0.0%. This source can often be way outside of the range of others. When they are far out from others, they often can be correct.

The rest of the analysts were looking for -1.0% to -1.3%. Factory Orders were reported at -0.5%. While lower than the previous month, it was higher than what analysts were looking for.

The National Association of Realtors reported that Pending Home Sales were far lower than even last month’s reported decline of -3.7%. The number of residential purchase contracts that are signed, but awaiting closing was -13.3%.
It is too bad that the bond market ignored this number. It would have been great for rates. As it is, it is only bad news for the readers of this blog.

With Pending Home Sales ignored, and Factory Orders above anticipated the bond market combined that info with an early closing and day off tomorrow. Rates are higher as a result. The 10-year Treasury is +.039% with the rate at 5.037%.

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

The data this morning should be moving rates higher, but they are lower due to other concerns. The ISM was forecast to be 55.0 to 55.5. The Institute of Supply Managers published the index somewhat higher at 56.0.

The price on Treasuries rose soon after the ISM on a couple of items. First, the weakness in the subprime mortgage market may curb U.S. economic growth. That would be better for bonds.

Second, there is concern over potential terror threats before the Fourth of July holiday. Terrorism and any crisis causes a flight to safety.

The 10-year Treasury is -.023% with the rate at 5.010%.

SHORT-TERM OUTLOOK [2 July 2007]

We have seen some volatility of late as bond traders and investors attempt to find their footing. Any important data will give them reason to feel around even more.

A trading range has seemed to emerge around the 5.100% level on the 10-year Treasury. The floor is around the psychological 5.000%. The ceiling looks as if it is just above the Fed Funds rate at 5.250%. The recent high occurred on 12 June at 5.297%. The low around 5.080% has been tested on a few occasions in the short-term. Most recently was the day of this outlook.

Most of the week’s data is of moderate importance and moderate volatility. The big item for the week will be Friday’s Employment Situation Report. This report contains the Unemployment, Payroll Growth, Average Workweek, and change in Hourly Earnings.

Markets will be closed for Independence Day, and will close early on Tuesday.

MID-TERM OUTLOOK [2 July 2007]

There are a few bright spots and some dark spots for rates for the next few months.

First, the good news. But remember, good news for rates often means bad news for the economy.

A.) On 26 June the Consumer Confidence was slightly below expectations. This could give us strong indication for the mid-term direction of rates. Analysts were looking for 105.0 to 106.0. The Conference Board released the number at 103.9.

Lynn Franco, Director of The Conference Board Consumer Research Center said, "A perceived softening in present-day business and employment conditions are the major reasons behind this month's pull-back in confidence. In fact, the Present Situation Index now stands at levels not seen since the final quarter of last year. Looking ahead, consumers remain rather subdued about short-term economic prospects. All in all, the glass remains half empty and half full."

Consumers' appraisal of present-day conditions was less upbeat in June. Those claiming conditions are "good" declined to 27.4 percent from 29.0 percent. Those saying conditions are "bad" increased to 16.4 percent from 14.6 percent. Consumers were also less positive about the job market.

B.) The softness in consumer sentiment may be what has driven the decline in both the Redbook and UBS store Sales in the last few months. To date, the decline in both of these weekly numbers have not affected the more important Retail Sales Report.

C.) Investor Sentiment may be, repeat, MAY BE changing. (‘May be’ cannot be emphasized enough.) The floor-ceiling range mentioned in the Short-Term Outlook has occurred in the last 5 weeks. When the floors and ceilings are tested – which simply means that rates get close to that top and bottom – the bottom has been tested more often that the top. What’s more, rates have been tending to hover at the lower end of the range.

On the negative side:

1.) While investor sentiment may be getting ready for a turn, investor sentiment still leans towards higher rates. The bond market has been in a selling mood since 10 May 2007

A few months back this blog wrote that the bond market seemed to be looking for any excuse to buy bonds and thus drive rates lower. That trend has reversed itself. The bond market is now looking for any reason to sell, and correspondingly raise rates.

On 31 May 2007 there was one such example. There were six items published that day. Even though most of the economic items came in as expected, three did not. Of the three, two were lower than expected and should have moved rates lower. Instead rates continued their upward trend. Clearly, investor sentiment has turned bearish on buying bonds.

Investors are becoming bearish and are starting to realize that inflation exists. They are starting to see that the FED is more determined fight inflation. More and more FED officials are making hawkish comments.

One additional argument that investor sentiment is for higher rates happens on days when there is no data. It has only happened 4 times since 10 May. Two times the bond market was flat; two times it was up some.

2) The housing bubble has ‘burst’. Will housing continue to decline? Is it flattening? Or, is it on the verge of a rebound? The data over the last few months has been a resounding maybe to all three.

IF homeowners start to see a rebound in housing their confidence will increase. As confidence increases, so will spending. Economic growth is moderate now with problematic inflation. Strong growth could renew strong inflation.

The slide in Real estate has not yet seemed to affect retail sales or consumer confidence. Inflation hawks can’t win for losing.

On 08 May 2007 the bond market responded to an unscheduled announcement by the National Association of Realtors (NAR). The NAR reduced its sales forecasts for 2007 and 2008, predicting that stricter lending standards would limit home buying. That only makes sense as stricter guidelines reduce the number of buyers able to get a mortgage. Given the current oversupply of houses, verses the very number of buyers we have a buyers market now as it is. Reducing the number of buyers hits the real estate market with a double whammy.

Sales of existing homes will probably fall about 3% this year to 6.29 million from 6.48 million in 2006. Sales of new homes are projected to fall about 18% to 864,000, compared with a 14% drop predicted last month. Housing starts are expected to drop 19% to 1.46 million.

When there are signs of housing market weakness it helps the price of bonds. Since it is a sing of a slowing economy it instills safe-haven interest.

At the same time, and on the other hand, the bond market seems to have discounted the housing bust. That means that yes, they know that housing is in trouble. They are guessing it will be in trouble for at least the Mid-Term, if not the Long-Term. The bond market has included (which is what economist have in mind when the word ‘discount’ is used) the housing slump into the price. Both bond traders and analysts will need to see a big change in the housing market one way or another before a new rate trend will be established based on residential real estate.

3) The US and the global economy appear to be in recovery. This has to be the shortest, least felt ‘recession ever experienced. (The 2.2% main stream media aside, there never was a recession; GDP never went below 0.0 %.)

A major part of the growing global economy is China. On 12 June, the Chinese consumer price index for May was +3.4% in year-to-year analysis, according to data published by the [Chinese] National Bureau of Statistics. Most of the gains were due to food prices, and haven't spread to a broad range of consumer goods. What we would call Chinese core-CPI was +1.0%. China’s food prices jumped 8.3% from a year ago.

Even though Chinese core-CPI was low, the headline inflation rate is now higher than the interest rate banks pay on deposits, currently set at 3.06% for one year. That gives Chinese consumers a big incentive to spend or invest that money rather than let it sit in the bank.

Further, and of great Long-Term bearing on US interest rates – is how this will diminish demand for US Treasuries. When demand for any commodity decreases, the price also declines. When bond prices deteriorate as they have, rates go up.

4) In February this blog wrote:

“We have one great inflation fear in the mid-term; corn prices. With all the talk of alternate fuel and ethanol, corn futures have nearly doubled. Corn is a staple of most food products that we eat. Increases in corn prices will not just impact corn flakes, but pop/soda, beef, and pig, chicken, candy bars, just about anything we eat.”

Grain stockpiles in many countries have fallen to multiyear lows, even as increased production of biofuels such as ethanol has added a new source of demand.

Even the best estimates of corn based fuel say that it will never replace the need for fossil fuels. At best it can only reduce the demand some. It would be much better for us to reduce our demand on foreign oil and decrease the price at the pump by; 1.) Drilling where we know that there is oil, 2.) Build refineries, 3.) Eat food as food.

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

Nearly all of yesterday’s price loss, and corresponding rate increase have been reversed. In early morning trading the price and rate reversal was even greater.

The bond market opened with the release of Personal Income & Spending. Both were a surprise to the market. Personal Income was supposed to be +0.6% across the board. While higher than last month’s +0.1% the reported +0.4% was lower than what the market was thinking it would be. Personal Spending was also below the forecast +0.7%. It equaled last month’s +0.5%.

A portion of the report is the PCE (Personal Consumption Expenditure). This is the inflation gauge that the FED follows the most; which of course makes it very important. While it was in the slim range of predictions of +0.1% to +0.2%, it was at the low end +0.1%.

The three combined to bring the 10-year Treasury to the day’s low of 5.045%. This was -.073% lower than yesterday’s close.

Rates were moved a bit higher around 09:00cdt {14:00gmt} release of the Michigan Consumer Sentiment, the Chi PMI and the Construction Spending reports. All three were above the predicted levels.

The Chicago PMI (actually out at 08:45cdt {13:45gmt}) was predicted to be 57.5 to 59.9. Only one source was the high prediction of 59.9, the next highest was 58.0. The National Assoc. of Purchasing Managers published its index at 60.2.

Construction Spending was mostly forecast at +0.2%, one was +1.0%; again, the same source. Construction Spending was reported at +0.9%.

The revised Michigan Consumer Sentiment was also stronger than the anticipated 83.7 to 84.0. The U of Michigan reported its index at 85.3.

While those three were above the forecasts they were not able to maintain an upward direction. In mid-morning, the 10-year Treasury has settled around 5.081%, -.037%.

SHORT-TERM OUTLOOK [29 June 2007]

We have seen some volatility of late as bond traders and investors attempt to find their footing. Any important data will give them reason to feel around even more.

It trading range has seemed to emerge around the 5.100% level on the 10-year Treasury. The floor is around the psychological 5.000%. The ceiling looks as if it is just above the Fed Funds rate at 5.250%. The recent high occurred on 12 June at 5.297%. The low around 5.080% has been tested on a few occasions in the short-term. Most recently was the day of this outlook.

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

The FOMC Policy Statement caused rates to do what this blog thought that they might. Rates went up based on comments in the FOMC Policy Statement. Specifically the FED’s rate setting committee said, “(S)ustained moderation in inflation pressures has yet to be convincingly demonstrated. Moreover, the high level of resource utilization has the potential to sustain those pressures.

"In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected."

They are saying, in FED speak, that the FOMC is still concerned with inflation, and they will not be lowering rates anytime soon.

Soon after the Policy Statement the rate on the 10-year Treasury shot up to 5.116% which was +.046 over the close of the precious day. Rates moderated some soon after. It is possible that the bond market concentrated on the previous sentence in the Policy Statement. It said, “Readings on core inflation have improved modestly in recent months.”

In good news for the economy as a whole the FOMC summarized, “Economic growth appears to have been moderate during the first half of this year, despite the ongoing adjustment in the housing sector. The economy seems likely to continue to expand at a moderate pace over coming quarters”

The 10-year Treasury closed at the days high of +.048% with the rate at 5.118%. The price – which moves in opposite direction from the yield was -5/32 at 95&11/32.

Apparently inflation is still a concern, and the bond market is reflecting that to some degree. The 10-year Treasury is +.021% with the rate at 5.091% in mid morning trading.

It could be a lot worse, and still may be. The FOMC Policy Statement is out this afternoon at 13:15cdt {1:15pm, 18:15gmt}. There is potential for all markets to be impacted by the FOMC. (See yesterday’s post.)

The GDP Report did come out at the market’s opening. A major portion of the GDP Report is the Chain-Deflator. This important measure of inflation was anticipated to be +4.0% annually. It was reported at 4.2% annually. That extra .02% did cause some bond selling, but could have moved rates even higher.

GDP itself was within the predicted +0.6% to +0.8%. It was reported at +0.7%.

The weekly Initial Jobless claims were a bit below the forecast 315k to 319k. 313k employees filed for first time unemployment insurance last week. As an inverse indicator, this may have caused a small amount of this morning’s bond selling and corresponding rate increase.

The Help-wanted Index is usually ignored, but it can occasionally give a picture for the future of the employment picture. The analysts that do track this were looking for a reading of 29, but it was reported at 27.

This blog will report on the FOMC this evening.

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

The day turned out to be a decent one for rates with the 10-year Treasury closing -.031% with the yield at 5.070%.

The bond market was driven by the Durable Goods Orders. Orders for big ticket items like washing machines to Boeing 747s were anticipated to be 0.0% to -2.0%; Only one source was guessing the -2.0%, and only one was looking for 0.0%, the rest anticipated -0.8% to -1.5%. The real number was far lower than last month’s +0.8%. The commerce department reproted the orders at -2.8%.

That drove the bond’s price up at the opening. The yield – which always moves in the opposite direction from price – opened at 5.053%, which was -.048% than Tuesday’s close.
Bond rates moved to their low of the day twice in the first hour of trading. The low for the day was 5.028%, moving the rate -.073% lower than Tuesday.

TOMORROW 28 JUNE 2007.

The yield on Wednesday reversed some in the last hour of trading. No doubt traders soon remembered that the FOMC makes its announcement on short-term interest rates. There is little expectation that the FED will make any changes in the Fed-Funds rate. The important part of the announcement is in the Policy Statement. The Policy Statement is little more than a summary of what the governors discussed at their meeting.
It is read very closely by analysts to try and guess the future for short-term rates. The simple placement of a coma can gain or lose billions of dollars. The FOMC will be very careful to not paint too optimistic a picture for lower rates. That happened recently and caused wild fluctuations in the bond and equity markets.

MID-TERM OUTLOOK [27 June 2007]

There are a few bright and dark spots for rates for the next few months.

First, the good news. But remember, good news for rates often means bad news for the economy.

A.) On 26 June the Consumer Confidence was slightly below expectations. This could give us strong indication for the mid-term direction of rates. Analysts were looking for 105.0 to 106.0. The Conference Board released the number at 103.9.

Lynn Franco, Director of The Conference Board Consumer Research Center said, "A perceived softening in present-day business and employment conditions are the major reasons behind this month's pull-back in confidence. In fact, the Present Situation Index now stands at levels not seen since the final quarter of last year. Looking ahead, consumers remain rather subdued about short-term economic prospects. All in all, the glass remains half empty and half full."

Consumers' appraisal of present-day conditions was less upbeat in June. Those claiming conditions are "good" declined to 27.4 percent from 29.0 percent. Those saying conditions are "bad" increased to 16.4 percent from 14.6 percent. Consumers were also less positive about the job market.

B.)The softness in consumer sentiment may be what has driven the decline in both the Redbook and UBS store Sales in the last few weeks. To date, the decline in both of these weekly numbers have not affected the more important Retail Sales Report.  They may soon and that would be a plus for interest rates.

On the negative side:

1.) Investor sentiment leans towards higher rates. The bond market has been in a selling mood since 10 May 2007

A few months back this blog wrote that the bond market seemed to be looking for any excuse to buy bonds and thus drive rates lower. That trend has reversed itself. The bond market is now looking for any reason to sell, and correspondingly raise rates.

On 31 May 2007 there was one such example. There were six items published that day. Even though most of the economic items came in as expected, three did not. Of the three, two were lower than expected and should have moved rates lower. Instead rates continued their upward trend. Clearly, investor sentiment has turned bearish on buying bonds.

Investors are becoming bearish and are starting to realize that inflation exists. They are starting to see that the FED is more determined fight inflation. More and more FED officials are making hawkish comments.

2) The housing bubble has ‘burst’. Will housing continue to decline? Is it flattening? Or, is it on the verge of a rebound? The data over the last few months has been a resounding maybe to all three.

IF homeowners start to see a rebound in housing their confidence will increase. As confidence increases, so will spending. Economic growth is moderate now with problematic inflation. Strong growth could renew strong inflation.

The slide in Real estate has not yet seemed to affect retail sales or consumer confidence. Inflation hawks can’t win for losing.

On 08 May 2007 the bond market responded to an unscheduled announcement by the National Association of Realtors (NAR). The NAR reduced its sales forecasts for 2007 and 2008, predicting that stricter lending standards would limit home buying. That only makes sense as stricter guidelines reduce the number of buyers able to get a mortgage. Given the current oversupply of houses, verses the very number of buyers we have a buyers market now as it is. Reducing the number of buyers hits the real estate market with a double whammy.

Sales of existing homes will probably fall about 3% this year to 6.29 million from 6.48 million in 2006. Sales of new homes are projected to fall about 18% to 864,000, compared with a 14% drop predicted last month. Housing starts are expected to drop 19% to 1.46 million.

When there are signs of housing market weakness it helps the price of bonds. Since it is a sing of a slowing economy it instills safe-haven interest.

3) The US and the global economy appear to in recovery. This has to be the shortest, least felt ‘recession ever experienced. (The 2.2% main stream media aside, there never was a recession; GDP never went below 0.0 %.)

A major part of the growing global economy is China. On 12 June, the Chinese consumer price index for May was +3.4% in year-to-year analysis, according to data published by the [Chinese] National Bureau of Statistics. Most of the gains were due to food prices, and haven't spread to a broad range of consumer goods. What we would call Chinese core-CPI was +1.0%. China’s food prices jumped 8.3% from a year ago.

Even though Chinese core-CPI was low, the headline inflation rate is now higher than the interest rate banks pay on deposits, currently set at 3.06% for one year. That gives Chinese consumers a big incentive to spend or invest that money rather than let it sit in the bank.

Further, and of great Long-Term bearing on US interest rates – is how this will diminish demand for US Treasuries. When demand for any commodity decreases, the price also declines. When bond prices deteriorate as they have, rates go up.

4) In February this blog wrote:

“We have one great inflation fear in the mid-term; corn prices. With all the talk of alternate fuel and ethanol, corn futures have nearly doubled. Corn is a staple of many food products that we eat. Increases in corn prices will not just impact corn flakes, but pop/soda, beef, and pig, chicken, candy bars, just about anything we eat.”

Grain stockpiles in many countries have fallen to multiyear lows, even as increased production of biofuels such as ethanol has added a new source of demand.

Even the best estimates of corn based fuel say that it will never replace the need for fossil fuels. At best it can only reduce the demand some. It would be much better for us to reduce our demand on foreign oil and decrease the price at the pump by; 1.) Drilling where we know that there is oil, 2.) Build refineries, 3.) Eat food as food.

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

Rates are moving up some this morning, most likely the bond market is preparing for a worse case scenario for Thursday’s FOMC meeting.

The 10-year Treasury is +.023% with the rate at 5.101% in late morning trading.

The economic data was close to expected, but if anything, should be moving rates lower. Both of the days major items were out at 09:00cdt {14:00gmt}.

Economists were predicting that New Home Sales would range from 900k to 930k. They were reported right in the middle of that range at 915k.

The Consumer Confidence was slightly below expectations, but gives us the strongest indication for the mid-term direction of rates. Analysts were looking for 105.0 to 106.0. The Conference Board released the number at 103.9.

Lynn Franco, Director of The Conference Board Consumer Research Center said, "A perceived softening in present-day business and employment conditions are the major reasons behind this month's pull-back in confidence. In fact, the Present Situation Index now stands at levels not seen since the final quarter of last year. Looking ahead, consumers remain rather subdued about short-term economic prospects. All in all, the glass remains half empty and half full."

Consumers' appraisal of present-day conditions was less upbeat in June. Those claiming conditions are "good" declined to 27.4 percent from 29.0 percent. Those saying conditions are "bad" increased to 16.4 percent from 14.6 percent. Consumers were also less positive about the job market.

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