Jon Hilsenrath, who closely covers the Fed, wrote that tapering would not occur any time soon. This quickly put us upside down on our alert to lock, which was obviously wrong. Both Stocks and Bonds rallied smartly after the news. This sets up the June 19th Fed Meeting and statement to be of even greater interest. If Hilsenrath is correct, then Bernanke will echo these common remarks, which could be a plus for both Bonds and Stocks. Bonds are continuing to the upside this morning, while Stocks are near unchanged. Wholesale inflation, by means of the Producer Price Index (PPI), was reported up 0.5% this morning. This headline number was much stronger than the 0.2% expected, and a big increase from last month’s -0.7% reading. However, after stripping out food and energy, Core PPI rose a very bland 0.1%, which was in line with expectations. The markets know that PPI, or wholesale inflation, doesn’t always translate to consumer inflation, so the markets shrugged off the data and will await the Consumer Price Index (CPI) report on Tuesday. So with the stock market in a downward to sideways correction things look good for Mortgage Bonds as two days of positive news have brought rates back into the mid to high 3% range.
Posted on: Fri, 14 Jun 2013 14:03:52 +0000