Weekly Outlook

Current Tren Direction: Higher
Risks Favor: Cautiously Floating
Current Price of FNMA 6.0% Bond: $100.47

This has been a bond friendly week. With reports showing lower inflation (Core Prices) and an overall slower econdomy (GDP) it looks like interest rates are primed to bounce back a few notches. Initial jobless claims came in at expectations of 316,000 stabalizing the upward trend we've been experiencing.

On a technical level, bonds still remain overbought, which doesn't seem to be having an effect on investors; participation at yesterday's auction of 20 billion in two year treasury notes went very well (37%). The high level of foreign interest in our bonds is strengthening the push lower.

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Weekly Outlook

Current Trend: Sideways
Risks Favor: Tentatively Floating
Current Price of FNMA 6.0% Bond: $100.09

We have a full line-up of economic news scheduled for this week, especially when considering the mild week we just experienced. However, we won't hit the beef of the line-up until Thursday when the Retail Sales Report is released. Following that is the Consumer Price Index (CPI) and Core Inflation numbers on Friday. Retail sales is a good measurement because it shows the level at which consumers are spending, a great indication as to whether or not people are becomng more tight with their money due to inflation and higher interest rates. Similar is the CPI, which will reveal whether or not prices on a common basket of goods and services are increasing or leveling off.

Bonds will push higher if these numbers seem controlled and inflation contained, to which the Fed will be paying special attention to as well; their next policy decision is rapidly approaching on September 20th. If inflation starts to raise its head once again we could see a return to .25% hike(s). Also, there is an element of surprise in the form of Fed speakers who like to speak freely about inflation levels. Five of them are speaking this week and could prove a difference if what they say is clear enough for traders to react.

From a technical standpoint bonds are positioned in between strong resistance and support levels, thus these reports could be decisive as to which direction bonds end up going. Moreover, bonds are still overbought and could help push matters lower if news come in unfavorable.


Setpember 12    Balance of Trade                             Moderate
Setpember 13    Crude Inventories                           Moderate
September 14    Jobless Claims (Initial)                    Moderate
September 14    Retail Sales                                    High
September 14    Retail Sales ex-auto                        High
September 15    Consumer Price Index (CPI)             High
September 15    Core Consumer Price Index (CPI)     High
September 15    Empire State Index                         Moderate
September 15    Capacity Utilization                        Moderate
September 15    Industrial Production                       Moderate
September 15    Consumer Sentiment Index (UoM)    Moderate

Weekly Outlook

Current Trend: Moving Higher
Risks Favor: Cautiously Floating
Current Price of FNMA 6.0% Bond: $100.09

With all the news that hit the docks last week were now looking at a pretty mild economic calendar for this week. The Institue of Supply Management (ISM) Services, Crude Inventories and Fed Beige Book are due out tomorrow, other than that we'll be looking at technical data as to what the market may or may not do throughout the rest of the week.

Setpember 06   ISM Services Index           Moderate
September 06   Crude Inventories            Moderate
September 06   Beige Book                     Moderate
September 07   Jobless Claims (Initial)    Moderate