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Daily Market Commentary

March 16, 2007

Quiet day yesterday as the bonds traded in a narrow range all day.

 

This morning, we are starting slightly lower as CPI came in slightly higher than expected., although the core was flat. This is two inflation reports in a row which haven't shown a decisive erosion in the rate of price increases.  This doesn't bode well for the bond market as a whole, although the trend in inflation remains down.  Pressure for the Fed to ease has come off this week.  Fed Fund futures have backed up and are now predicting a rate cut by October.  this is a couple of months later than what was indicated last week.

 

Expect the data to continue like this, mixed readings in general.  Once again, keep a sharp eye on employment.  Jobs remaining strong will be the difference between a soft landing and a deeper slow-down.

 

 

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