Bleak economic reports present a rather gloomy backdrop to today’s Fed meeting. In the 2nd quarter of 2010 U.S. business productivity fell 0.9% and labor costs remained flat. The decline in productivity was the first in 1 ½ years and suggests businesses may need to hire additional workers soon as the existing labor force is at maximum capacity. In addition to the decline in productivity business inventories rose as sales slumped.
Economists, analysts and investors are all focused on the language in today’s Fed announcement for any verbiage change that significantly alters the current position low rates and sitting on the bench waiting and hoping for a recovery.
As if there was not enough for the markets to digest this morning, the U.S. Treasury continues its task of issuing more debt for bureaucrats to spend. Today the Treasury will auction $34 billion of 3 year notes, followed by $24 billion of 10 year notes on Wednesday and $16 billion of 30 year bonds on Thursday.
Both bond and stock markets are sliding today, with mortgage prices worse by .125% to .250%.
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