Bonds Rally, Dollar Tumbles

Retail Sales fell more than expected, helping to ignite a rally in the bond
market. The Current Account deficit was wider than forecast and Business
Inventories rose slightly more than expected.

As mentioned above, Treasuries rose sharply after the release of February’s
Retail Sales data. With the yield on the 10yr T-Note at the highest level since
June 2004, and 5yr yields at the highest level since April 02, the treasury
market is understandably sensitive to any signs of weakness in the economy.

The US Dollar Index lost 0.62%, dragged down by the sharp drop in the US Dollar
against the Yen and GBP. The Dollar also lost ground versus the Euro and Swiss
Franc. Today’s larger than expected current account deficit was the main cause
for concern among forex traders, with the Q4 figure hitting a new record.

Retail Sales:

Consensus -0.9%, Actual -1.3%

ex Autos

Consensus -0.5%, Actual -0.4%

Business Inventories:

Consensus 0.3%, Actual 0.4%