Mortgage bond prices remained weaker throughout the day adding to the losses from yesterday afternoon.
The
U.S. bond market was generally weaker heading into the data as news out
of the euro zone was not U.S. rate friendly. France and Germany both
saw higher than expected GDP figures. While the rest of the euro zone
showed decreases, those decreases were expected.
The news this
morning added fuel to the already negative fire. Retail sales rose
0.8%, considerably higher than the expected 0.3% increase. The producer
price index was higher than expected. PPI rose 0.3%, expected up 0.2%.
The core, which excludes volatile food and energy rose 0.4%, expected
up 0.2%... not rate friendly! The last thing we need is to see
inflation fears ignited. Inflation, real or perceived is the enemy of
fixed income securities and causes prices to fall and rates to rise.
Tomorrow we have consumer price index, industrial production, and capacity use data.
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