On November the 1st, the FOMC is expected to raise the Fed Funds Rate another 25 basis points (to 4%), and probably issue a statement that was similar to its last.

Now that energy prices are being to subside, many investors are becoming more optimistic about the economy. So, if energy prices continue to pull back, some are wondering what will be the next event that slows the economy.

Energy prices will probably remain fairly high until the economy cools. Rates on longer term bonds have been ticking up steadily for the past few weeks. Higher borrowing rates will continue to cool an overheated real estate market.

Bonds are holding pretty firm in the wake of this morning's stronger than expected GDP number. Last week, the 10-year yield rose to 4.60%.Bonds paused this morning after the release of the Employment Cost Index which rose in line with expectations. Over the past 12 months, employment costs have risen 3.1%, the smallest such gain in the last six years.

The Chicago Purchasing Managers index rose unexpectedly to 62.9 in October. Most analysts had expected a small decline in the index, which measures Midwest manufacturing activity.

30-Year T-Bond 4.774% +0.004% 10/28/05
10-Year T-Note 4.567% +0.009% 10/28/05
5-Year T-Note 4.450% +0.020% 10/28/05
2-Year Note 4.382% +0.041% 10/28/05

THE MARKET

At Midday, Crude oil was down over a dollar trading below $60 a barrel, and the Dow and the Nasdaq are adding to Friday's gains.

Energies

Crude Oil (CLZ5) Dec 05 59.90 -1.32
Crude Oil (CLF6) Jan 06 60.35 -1.18
Crude Oil (CLG6) Feb 06 60.75 -1.07
Crude Oil (CLH6) Mar 06 61.15 -0.86

Exxon (XOM) was the subject of a takeover rumor this morning by a Chinese company. The details were of the unsolicited offer were not provided.

Wal-Mart (WMT) raised its guidance for same store sales in October to +4.3%. The stock is trading higher.