Posted To: MBS Commentary

Contrary to some of the wholesale price pressures suggested by recent reports (like the ISM manufacturing "prices paid" component, which rose to the highest levels since 2011 last week), consumer-level inflation is declining faster than expected. Bonds have been concerned about the potential inflation impact of the Fed's monetary policy bazooka, not to mention the general economic recovery and stock market "wealth effect." But the data is not showing it–at least not for January. Today's 1.4% core CPI number is well short of the 2.0-2.5% range targeted by the Fed. Bonds like that! The afternoon's 10yr Treasury auction will be the next big flashpoint for bonds, unless the CPI reaction steals the show. What does that mean, exactly? From time to time, the bond market…(read more)

Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Source: Mortgage News Daily