Interest Rate Roundup

Thursday, May 10, 2007

The skinny on today's data deluge

We just got inflation report #1 for April -- import prices. The details:

* Overall import prices gained 1.3% from March, above expectations for a 1% rise. However, the previous month's gain was revised down to 1.5% from 1.7%. Prices are up 1.9% year-over-year.

* If you strip out fuels, you get a monthly gain of 0.2% and a YOY increase of 2.6%. We saw sizable gains in industrial supplies (+1%, ex fuels), agricultural imports (+2.1%), unfinished and finished metals (+2.8% and +2.2%, respectively).

In other economic news, we saw a sizable drop in weekly jobless claims -- they came in at 297,000, the lowest since the week of January 12. And we got a larger-than-expected reading on the trade deficit in March. It jumped more than 10% to $63.9 billion from $57.9 billion in February. Higher oil prices drove a chunk of the deficit's gains.

The market reaction has been largely muted -- long bonds were recently up 4/32, while 10-year note yields were down ever so slightly to 4.66%. One likely reason is that oil prices have come back down in the past several days. Relatively weak April sales data from major retailers is also keeping the pressure off bonds.


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