Producer prices increased 1.1% in December raising the year-over-year increase to 4.0%. Most of the increased prices were the result of oil and energy price increases; however, there is growing concern over the rapidly rising prices of food. Ex-food and energy PPI rose only 0.2% and 1.3% year-over-year.
Initial jobless claims rose 35k to 445k for the week ending January 8th. This is a significant increase given the positive momentum built around the recent drop in claims. This does not make for a new trend; but, next week’s release just became more important to see if this higher level of claims is repeated or if it is an anomaly.
Back to global food prices. Grain futures, particularly corn and soybeans, rallied Wednesday after a U.S. report warned of dwindling global supplies. Reuters and Bloomberg news services have both reported countries such as China, S. Korea, India, Philippines, and several African nations are banning grain exports from their countries, reducing tariffs on imports, and/or offering subsidies, all in efforts to control runaway food prices and defuse public protests. Food and energy prices will be a growing story in 2011.
Regarding the mortgage market, bond prices are flat from Wednesday’s close, so there will not be much change on today’s rate sheets.
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