Morning Report: Inflation at the wholesale level comes in lower than expected

Vital Statistics:

 

Last Change
S&P futures 2025 -14.5
Oil (WTI) 53.14 0.64
10 year government bond yield 1.70%
30 year fixed rate mortgage 3.83%

 

Slow news day.

 

Stocks are lower this morning as we round out a volatile week. Bonds and MBS are up with global sovereign yields lower across the board. The Japanese Government Bond is flirting with a record low yield at -22 basis points. Japan has about $12 trillion in government debt outstanding, which isn’t chump change – it is about 75% of the Treasuries held by the public.

 

Chaos in the Italian government pushed their yields up 26 basis points, and they now yield more than US Treasuries. Also, China reported a year on year decline in producer prices, as the country is in a bind between slowing growth and a real estate bubble.

 

Inflation at the wholesale level came in lower than expected, with the producer price index up 0.2% MOM / 1.7% YOY. Ex-food and energy, it fell 0.1% MOM and was up 2.1% YOY. Now that the Fed is in easing mode, the inflation numbers will fade in importance.

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Author: Brent Nyitray

Why do you need new bands? Everyone knows rock attained perfection in 1974. It's a scientific fact. - Homer Simpson

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