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Rate markets started a little weaker this morning but at 8:30 markets were saved when Feb retail sales were better than expected; up 0.8% when the auto sector and gasoline expenses are ignored (+0.3% overall). It took most of the morning but the 10 yr turned up in price and held it the remainder of the day. Mortgages however barely made it back to unchanged after being down 4/32 (.12 bp) at 9:30. The short take; it was another quiet session with the equity markets clinking to relatively unchanged reads.

Treasuries and mortgages opened weaker early this morning on better trading in the stock index futures. At 8:30 Feb retail sales were much better than expected adding more to the stock indexes and pressing rate markets a little more. Retail were expected to be up 0.2% overall and ex autos unchanged; sales increased 0.3% and when auto sales are stripped out sales were up a solid 0.8%; when auto and gas sales are removed, up 0.9%. Sales were markedly stronger, particularly with the number of major snow storms in Feb that hit much of the East and Mid-West. At 9:00 the 10 yr note -7/32 at 3.76% +3 BP, mortgage prices -5/32 (.15 bp) and the DJIA index +39. At 9:30 the DJIA opened +20, 10 yr note -4/32 and mortgage prices off 4/32 (.12 bp).

Treasury finished the 3 auctions this week with the $13B 30 yr bond, the 30 went better than most were expecting even though most were expecting a strong demand. The rate was lower than expected at 4.679% with a cover of 2.89 and indirect bidders taking 23.9% while the direct bidders for the first time gobbled up more than indirects taking 29.3% of it. The previous $16B 30   yr saw 4.720% with a bid-to-cover of 2.26, an indirect bidder participation rate of 28.5% and a direct bidder take of a whopping 24.1%. The 10 auction average is 2.47 cover, 41.47% indirect take and a 7.98% direct accepted.

Prior to the 8:30 weekly jobless claims report the 10 yr and mortgages were trading lower; 10 yr -7/32 and 30 yr mtgs -5/32 (.15 bp) ; the DJIA -14. Weekly jobless claims were expected to be down 9K to 460K, as released claims were down 6K to 468K with continuing claims increasing for the first time in weeks, at 4.558 mil frm 4.52 mil last week, the 4 week average increased by 5K. Also at 8:30 the Jan trade deficit hit at -$37.3B less than $41B expected. Not much market reaction to the 8:30 reports; 10 yr -6/32, 30 yr mtgs -3/32 (.09 bp) and the DJIA -19. At 9:00 the DJIA -35, 10 yr note -2/32 at 3.73% +0.5 BP, mortgage prices -1/32 (.03 bp). At 9:30 the DJIA opened -14, 10 yr note -5/32 and mortgage prices were down 3/32 (.09 bp).

I watched the paint dry and the grass grow today. It was slow and you had to watch very closely to see it; once I actually saw a blade of grass sit up and wave in the wind. There was nothing better to do today as the financial markets once again had little movement. Not much to get investors and traders motivated with no economic data and nothing of direct consequence to change the malaise. Lots of talk that China's inflation levels are increasing but we reported that yesterday; old news, but media needs something to talk about.

The back and forth trading continues today; up one day, down the next is the character of this market recently. The 10 yr note down 5/32 at 9:00, mortgage prices unchanged and the DJIA and other key indexes unchanged. At 9:30 the DJIA opened +5, the 10 yr -7/32 at 3.73% +3 BP and mortgages -2/32 (.06 bp).