This morning is a partial reversal of what the markets gave us Tuesday morning. Tuesday, as you recall, stocks rebounded sharply while bonds experienced a steep decline. This morning stocks are giving back most of Tuesday’s gains and bonds prices are improving. The yield on the 10 year note has fallen from 3.09% to 3.04% and mortgage prices are better by .125% to .25%.
Consumer prices for the month of May increased 0.2%, and 3.6% year over year. The year over year inflation rate is the highest headline inflation rate since October 2008. Subtracting food and energy prices, core inflation rose 0.3% and 1.5% year over year.
The Empire Manufacturing report plummeted in June from 11.88 to -7.79. While some other manufacturing indices have reflected weakening growth, this is the first sign of outright contraction in the sector. New orders dropped over 20 points, number of employees dropped 14 points, and the average workweek fell 25 points. These regional manufacturing reports can be volatile; however, in conjunction with this, the Fed reported Industrial Production in the U.S. rose a slight 0.1% in May. Again, this is a reflection of a slowing manufacturing sector.
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