Keith Gilabert is watching Bonds rise on Friday as traders considered the possibility the Federal Reserve would interrupt its policy of measured interest rate hikes at its next meeting.

Mr. Gilabert belives the most important index affecting mortgages rates is 10- year note which added 4/32 of a point to yield 4.13 percent. The 30-year note rose 14/32 of a point to yield 4.41 percent, down from 4.42 late Thursday.

Mr. Gilabert also notes Energy prices will be at the heart of the meeting. If the Fed believes high energy prices and the destruction done to the Gulf Coast will cut into economic growth, it is more likely to leave the federal fund rate at the current 3.5 percent. If they believe soaring energy costs will translate into higher prices overall, it will be more apt to continue with its pace of 'measured' rate hikes.

Due to the devatation of Katrina Keith Gilabert feels the Fed is finished with the rate hikes.

Inflation hurts bonds as it erodes the value of the fixed interest-paying investment.

Hurricane Katrina hit the Gulf Coast on Aug. 29 and, in addition to widespread flooding, destruction and death, caused a surge in oil prices.

Although off a record high of $70.85 reached Aug. 30, crude still remains well above the $40 or so a barrel that most in the industry think its worth.

U.S. crude traded up 52 cents a barrel at $65.01 early Friday on the New York Mercantile Exchange.

Mr. Gilabert definitely believes that since the spike in oil prices has hit the consumer the excess reserves that were once held in the consumers gas tank will be much less than normal and oil prices should retreat soon.