The Labor Department told this morning the Producer Price Index rose 0.4% in October versus the expectation of +.08%, while the core rate, less food and energy, fell 0.6%. The drop in the core rate was attributed to a decline in prices for new cars, trucks and computers. This data does tend to confirm the Fed’s point of view that inflation is not a problem.
The criticism the Fed has received regarding its 2nd round of quantitative easing has caused the markets to lose confidence that the Fed has enough commitment to keep interest rates low. The past two days have seen the biggest two-day decline in bond prices in almost two years. This morning bonds appear to have temporary support, but after declining early the yield on the 10 year note is stubbornly holding at 2.96%.
Mortgage prices worsened in lock step with treasury bonds, and you will note pricing for mortgages is worse than Monday. Keep in mind; however, one can still obtain a 30 year fixed rate loan at 4.50% with premium pricing, still a VERY good deal!!
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment