Bonds are modestly higher this morning as Traders digest an extravaganza of economic reports. Let's get to it: The New York Federal Reserve Bank reported the NY Empire Manufacturing Index for April at -3.2, worse than expectations of 0.0. This is the third month in the last four that the index has been negative. Readings below zero indicate contraction. The Bond did open lower this morning but quickly turned positive after the weak manufacturing report. Manufacturing in the Philadelphia region wasn't much better, as the Philly Fed Index was reported at -15.6. However, this number was slightly better than expectations of a -19.0 reading. Initial Jobless Claims were reported at 371,000, meeting expectations. The four-week average of initial claims, which smoothes out one-time factors such as bad weather or holidays, fell 1,000 to 365,750. In the week ending May 3, the number of people continuing to collect benefits gained 28,000 to 3.06 million - the highest level since March 2004. Overall this report suggests the labor market is still sluggish. Capacity Utilization and Industrial Production were both reported slightly lower than expectations. Some good news for Bonds - the 79.7% reading on Capacity Utilization is lower than recent readings and has pulled back from levels that were close to sparking inflationary pressures. Foreigners are digging our stuff - The March Net Foreign Purchases of US securities and bonds far exceeded expectations with a $80.4 Billion reading. The street had expected a number closer to $62.5 Billion so this reading of strong foreign demand for our Bonds has given prices an added boost today. Mortgage Bonds are currently trading higher after bouncing higher off the 200-day Moving Average floor yesterday. But as you know it has been too common an occurance for Bonds to start off higher and only to fade later in the day. We will keep you posted. | 
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