The Ratewatch
 Commentary by Bill Brizendine of Melody Capital MarketsAfter a rough week two of ’07, the Treasury bond market settled down in week three. The benchmark 10-year UST did move around – down 2 bps, then up 4, then down 4 and finally, up 2 - but ended at 4.78% on Friday, the same as the previous Friday. LIBOR continued a trend of remaining essentially flat on the short end. Remember when short term rates were the most volatile? Not so any more. It turned out that the CPI increased by a mere 2.5% in 2006, its best showing since 2003 when it rose only 1.9%. On the other hand, the core CPI - which excludes food and energy and is the index the Fed seems most concerned with - didn’t fare as well: 2.6% in 2006, above the 2.2% in each of the previous two years. This doesn’t strike us as good news on the rate-cutting front (and puzzles us as to why the big yawn last week in the debt markets). We have a bonus attachment this week entitled, “Capital Markets Presentation,” a review of several years of key interest rates. Download The RateWatch: A one-page analysis of institutional lending rates Download the Capital Markets Presentation |