Positive news for bonds this morning as inflation remains a non-event based on the Producer Price Index for May falling 0.3%, while excluding food and energy PPI rose 0.2%. Additional positive news for bonds was a report from the Commerce Department that Housing Starts fell 10% and building permits declined to a one year low. This data reflects an overhang of excess housing, including foreclosures and “shadow” inventory, and the expiration of the homebuyer tax credit.
U.S. stock markets are lower on the day given the downbeat economic data on housing while treasury and mortgage bond prices are improved. Mortgage bonds are approximately .125% better from Tuesday’s close. Remember, bonds sold off Tuesday afternoon, so the improvement is from those levels.
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