Bonds Rise Ahead of Fed Announcement

U.S. 10-year Treasury bonds rose today, boosted
by the drop in building permits, which may signal further deterioration in the
housing market. The Fed is expected to keep interest rates on hold this week but
weakness in the housing market has led the market to price in the possibility of
rate cuts later in the year.

The Japanese yen climbed versus the U.S. dollar
and euro. The yen has been cited as one of the primary causes of the recent
turbulence felt across the world’s stock markets as traders have been
liquidating carry trades.

Crude oil futures fell ahead of tomorrow’s weekly
inventory data. Bloomberg reported U.S. investigators concluded “BP Plc’s top
management repeatedly disregarded safety warnings at a Texas refinery for three
years before a 2005 explosion killed 15″. Rosneft, the Russian oil and gas
company, secured a $22 Bln. loan ahead of the planned purchase of the remaining
assets of Yukos.

Gold rose to a two week high, copper closed
higher for the fifth consecutive day but nickel suffered its biggest decline in
two weeks. Cocoa reached its highest price in nearly four years and wheat also


Sales: W/W Change: 0.4%, Y/Y Change: 2.7%

Housing Starts: Consensus 1.450 M, Actual 1.525
M. Permits: 1.532 M

Redbook: Store Sales, Y/Y Change 3.7%

John Lee

Associate Editor