Market commentary

Producer prices were flat in August as costs for energy and autos dropped. Core prices, excluding food and energy, rose just 0.1%, so a bit of good news on the inflation front. With some less positive news, the Commerce Department reported this morning retail sales for August did not increase and they only rose 0.3% in July, less than the originally estimated 0.5%. Consumers are being overwhelmed by a loss of confidence, a flat jobs market, and weak earnings growth, among other headwinds.
A large portion of those headwinds continue to blow across from Europe with the constant deluge of potential defaults by various countries on their debt. Reuters reported this morning that U.S. banks are coming to the rescue of several of their European counterparts as EU banks saw funding from U.S. money market funds dry up. While the U.S. banks are providing secured funding at higher than market interest rates, I remain skeptical. Should the EU banks default who will provide the bailout funds? Assuming a similar 2008 scenario, I expect you and me, as U.S. taxpayers, in addition to our European taxpayer buddies.
The effect of today’s economic data and news on U.S. markets has been close to nil, with stocks and bonds relatively flat from the close on Tuesday. Mortgage prices have improved approximately .125%.