Consumer prices, as measured by the Consumer Price index, were forecast to increase 0.3% in October but fell short, only increasing 0.2%. Excluding food and energy costs prices were unchanged from September, but were expected to have increased 0.2%. Year-over-year core inflation grew at the lowest rate on record in October at 0.6%. Commodity prices have traded lower the past few days, but one of the things I watch is the price of gasoline, which is over $3/gallon in south Orange County, CA. As we all know, higher gas prices are a direct reduction to consumers’ disposable income.
Stocks took it on the chin Tuesday and bonds rallied. This morning we see stocks flat and bond prices improving again, with mortgage prices better by 20 bps to 30 bps.
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