Thursday's bond market has opened in negative territory following the release of stronger than expected economic news. The stock markets are showing early losses with the Dow down 197 points and the Nasdaq is down 23 points. The bond market is currently down 6/32.

Today's big economic news was January's Retail Sales data. It showed an unexpected surprise in sales, indicating that consumers were spending much more than thought. The data revealed a 1.0% rise in sales from December's revised decline of 3.0%. Analysts were expecting to see a drop in sales, so there was a large variance between forecasts and the actual reading.

The Labor Department gave us weekly unemployment claim numbers this morning also. They reported that new claims fell from a revised total of 631,000 the previous week to 623,000 last week. However, analysts were expecting to see that 610,000 new claims for benefits were filed, meaning claims were higher than expected. This can be considered good news for bonds, but the sales data is much more important to the markets than weekly unemployment claims. Therefore, it has been a much bigger influence on today's rates than this report has been.

February's preliminary reading to the University of Michigan Index of Consumer Sentiment will be released late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows an increase in consumer confidence, the stock markets may move higher and bond prices could fall. It is currently expected to show a reading of 60.2, which would be a decline from January's final reading of 61.2 and indicate that consumers were less optimistic about their own financial situations than last month. This would be good news for bonds and mortgage rates, but after this morning's surprise in retail level sales it will be interesting to see how accurate forecasts were.

Also worth noting is an early close in the bond market tomorrow ahead of Monday's President's Day Holiday. The financial markets will be closed Monday and will reopen Tuesday for normal trading hours.

                    Mel