While not considered a major reading on inflation, the Producer Price Index released this morning reflected inflation is not a concern. July PPI rose 0.2%, and the core rate rose 0.3%, with a year over year reading of +1.15%. Additional good news for the stock markets came from the Federal Reserve with a report Industrial Production rose 1.0% last month, offering a glimmer of hope after the past two weeks of weak economic reports.
Bonds are giving back a small portion of Monday’s gains, however, not enough to consider the bull market over. Regarding bonds, specifically U.S. Treasuries, a report today stated China has reduced its holdings of U.S. debt for a second consecutive month. Potentially offsetting the lack of Chinese buying is the Federal Reserve as today the Fed will conduct its first Treasury purchase under its newly announced plan to reinvest its cash-flows from its mortgage bond holdings.
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