Mel's Blog

September 14th, 2007 9:54 AM
Retail Sales came in worse than expected causing prices to jump higher this morning.  Unfortunately, the bond has given back most of its early gains, and now stands close to a level where lenders are beginning to think of a re-price for the worse.  In yesterday's Update I had anticipated a bounce off the 200 Day Moving Average followed by a lackluster Retail Sales this morning.  This scenario has played out exactly as anticipated and given us a better looking rate sheet this morning.  Overall, Retail Sales increased by 0.3% but economists were looking for a 0.5% increase.  However, when factoring out the effect of auto sales, Retail Sales fell by a startling -0.4%, below consensus estimates of a 0.2% increase and was the largest decline in nearly a year.

Bond prices are near the middle of their trading range between solid support and tough resistance.  I recommend very cautiously floating for now with a finger on the lock trigger. Because they are currently resting on moderate support at the 10-DMA, I would like to give this level a chance to see if it can hold and perhaps help prices improve. 

Posted by Mel Samick on September 14th, 2007 9:54 AMPost a Comment (0)

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