In today’s only economic release, consumer prices for the month of November were flat month over month, bringing the headline year-over-year rate of inflation down to 3.4%. At the core level, excluding food and energy, prices increased slightly more than expected, rising 0.2%. As the government measures it, inflation is slightly higher than policy makers prefer, however, the Fed still believes at current levels of inflation they will have the tools to continue economic stimulus.
There is still no solution in sight to the European financial crisis, and therefore, U.S. bond prices remain strong with the yield on the 10 year trading at 1.88%. Mortgage spreads have widened this morning so pricing remains flat from Thursday.
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