Danny Salas

Chico, CA Interest Rates Market Report – Economic Influences – December 15, 2009

Inflation Readings High On PPI

Inflation Rearing Its Ugly Head

The Producer Price Index (PPI) was significantly higher than expected, at 1.8%, when experts expected a 0.8% reading.  Energy prices was the main reason, however, even after taking out the energy prices, the Core PPI stood at 0.5%.  That’s the highest reading since October of 2008.  This was enough to scare the markets into Bond Values plummeting, and therefore their yields and interest rates increasing about .375% Point compared to pricing, yesterday.  We were able to bounce back, a little bit, so we’ll have to see how the market absorbs this latest reading on inflation.  There’s no real inflation concern, with the exception of this report, so hang in there…let’s see the Consumer Price Index (CPI) reading before we jump to any conclusions…

Open Market Committee Meeting

The Fed starts its two day meeting today.  It will be interesting to see how they read today’s inflation numbers, coupled with tomorrow’s release of the Consumer Price Index.  Tomorrow at 2:15 Eastern, 11:15 a.m., our time, the Fed will speak about what their meeting entailed.  Keep in mind that investors will be listening to every word, trying to determine what their feeling is on the future of the economy.  Rates can move on speculation regarding what the market feel the fed will say, so hold your hat down!

Manufacturing Down – Production & Utilization Up

Something that’s not mentioned too often in my column is the New York Empire State Index.  It’s a reading on manufacturing, and it was the lowest monthly decline ever!  However, Industrial Production and Capacity Utilization were up!  So, given the fact that we’re manufacturing less, production and utilizing employee output is up, therefore, there is room for companies before they start hiring new people.

Locking Advice

At this point, we may as well hope that Bonds can remain above the 100 & 200-Day Moving Averages.  If we fall too far below, things could get ugly, however, let’s hope that inflation, on the consumer level, is not too much of a concern, tomorrow.  I told you it would be a bumpy ride…

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This entry was posted on Tuesday, December 15th, 2009 at 9:26 am and is filed under Chico Home Loans, Home Buying, Interest Rates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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