Market Comment Mortgage bond prices finished the week lower, which pushed mortgage interest rates higher. Rates were negative the first portion of the week amid thin trade and strong stocks. News out of the eurozone showed strength in that region. Their purchasing managers’ index reported the best economic growth since 2011. The 10 Year Treasury note auction was average. The 30 Year Treasury bond auction was mixed with a weaker than expected bid to cover and better than average foreign demand. Weekly jobless claims were 281K versus the expected 285K. The market reacted very little to the release. Mortgage interest rates finished the week worse by approximately 1/4 of a discount point. LOOKING AHEAD
Producer Price Index The producer price index is a measure of prices at the producer level and is important because it is the first inflation report to be released each month. Investors are typically able to gain an initial indication of inflationary pressures from the release. If producer prices are increasing, there is a tendency for producers to pass the increases on to consumers in the form of higher priced goods. It is important to note that the PPI is only a measure of goods, while the consumer price index is a measure of goods and services. It is possible for the price of goods to remain stable, while the price of services increases. In this scenario PPI would do little to warn of a change in inflationary pressures, while the CPI report would provide an indication of the inflationary effects of the service component. Copyright 2015. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied. |
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