Interest Rate Roundup

Friday, January 12, 2007

Bonds getting slapped around again

Looks like another down day in the bond market, with 10-year note futures off more than 6 ticks and the long bond down 12/32. Yields are up about 3-4 basis points across the board. Two catalysts today:

- Retail sales gained 0.9% in December, the most in five months. Excluding autos, sales were up 1% vs. 0.7% a month earlier

- Import prices were hotter than expected, up 1.1% on the month vs. a Bloomberg forecast of 0.6%. Some of that stemmed from rising oil prices, and obviously, they've dropped since the survey period. But import prices excluding petroleum also gained 0.4%, after rising 0.9% the month before. And import prices excluding ALL fuels rose 0.2%, the most in three months.

Bottom line: With the federal funds rate at 5.25% ... that "always right around the corner" Fed ease being pushed out even further ... and economic data revealing anything BUT economic Armageddon, Treasuries are in trouble.


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