Chris Rupkey
Chris Rupkey
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It may be just a matter of time before the public's inflation expectations start to rise. Commodity prices are soaring.
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It suggests that the industrial production setback reported for June is unlikely to last and that production geared up the very next month.
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Prices received rising so much is the first sign that businesses have increased power to pass on these energy-price increases. Energy will shortly be a major factor in the inflation equation, and this is what the Fed is worried about, so expect policy makers to keep pushing interest rates higher.
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This budget number is way out there; it was quite a shock.
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Stock losses are giving bonds some juice this morning; we're back to feeling that the economy is weak and that bonds are a buy here.
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All eyes will be on the jobs report. The Fed is still worried with inflationary pressures, and may very well not be done with rates. But as long as the economy keeps growing without a substantial pickup in inflation, we may see bonds falling and stocks rising.
buyers days eager evidence expected fresh homes lock market mortgage rates taking trend
Buyers may be eager to lock in rates now as mortgage rates are expected to trend higher. Many homes go on the market in the first days of spring, and this is the first real evidence that buyers are taking a fresh look at the market.
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The economy surprised on the upside and inflation was a surprise on the upside so (10-year Treasury) yields tested the level we hit last week which was 5.14 percent.
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The economy is creating over two million new jobs a year and these workers will need housing. Fears of a collapse in the housing market have been overblown.
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Higher energy prices are not providing any big headwinds for the economy and inflation remains very contained,
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Growth isn't fast enough that the Fed has to brake the economy, and at the same time it isn't slow enough that the Fed can stop and watch. Inflation pressures can still gain a foothold as the economy continues to take up slack resources.
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The markets were prepared for Greenspan to end his final meeting with the funds rate at neutral. What they got instead is the statement that rate hikes still 'may be needed.' This was not music to the market's ears.
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Expectations of Fed action have gone though the roof. The market is looking for two 25-basis-point moves and one 50-basis-point move before the presidential election.
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It's going to be volatile. The odds for a rate hike in June will go back and forth for the next couple of months.