Mel's Blog

Retail Sales were surprisingly good for January.  Economists were looking for a reading of -0.3%, but the final number was +0.3%, far stronger than expectations.  Auto sales, which account for 20% of the reading, increased unexpectedly after poor sales data from last month.  After factoring out the effect of auto sales, Retail Sales (ex-auto) gained 0.3%, which matched expectations.  Stocks moved higher on the news, while Bonds headed lower.  

President Bush is expected to sign the highly anticipated stimulus package today.  This means that HUD will have 30 days or less to come up with the median prices for areas throughout the country, which may then cause an increase to the conforming limit in those markets. 

Mortgage Bonds continue to trend lower and appear poised to test support at the 50-day Moving Average, which presently lies around 30bp beneath present levels.