Weekly Rate Update - 3/6/2006

Bond rates were up nearly 1/8% over the past week due mainly to activity in the European bond market. The European Central Bank (ECB) which is the equivalent of the Federal Reserve Board here in the US, decided to raise interest rates last week. This move makes foreign bonds more competitive with US bonds and investors became nervous on this news. Much like the Fed, the ECB tends to make a number of small consecutive moves, so this may be just the beginning.

Additionally last week, the unemployment numbers were very strong once a again providing further evidence that we may be in an inflationary cycle.

For this week, the major news will be the Jobs Report which will be released on Friday morning. After a rally over the past 3 months, rates are now back very near their early December mark. This is an important support level and it could very well be tested this week.