Market commentary

Debt ceiling debates, budget debates, dueling news conferences, economic data, earnings announcements and a threat from the rating agency Standard and Poor’s are all topics the markets are dealing with this morning. The threat from S&P to lower the AAA rating the U.S. now enjoys on its debt is a result of the impasse in Washington regarding the budget and debt ceiling.

On the economic front consumer prices dropped 0.2% in June, however, stripping out the volatile food and energy sectors prices rose .254%. Energy prices fell 4.4% month over month and were the largest contributor to the decline in the overall index.

Again on the consumer front, the Thomson Reuters/University of Michigan index of consumer sentiment decreased to 63.8, the weakest reading since March 2009, from 71.5 the prior month.
From the industry side of the U.S. economy the Federal Reserve announced this morning its index of Industrial Production rose 0.2% last month, reversing the 0.1% decline from the previous month.

Strong earnings from Google and Citibank initially powered the stock markets; however, the weak consumer confidence data put the brakes on the early rally. As of this writing stock indices and bonds are flat from Thursday’s close. Bonds closed weaker on Thursday so mortgage prices are worse by .125%.