Mel's Blog

The big news of the day was the Core Personal Consumption Expenditure (PCE) Index.  The report showed that the inflation level increased by 0.3% in February from the previous month.  This is the largest monthly increase since August and above expectations of 0.2%.  The important year-over-year Core rate of PCE rose to 2.4% from the previous reading of 2.3%.  Remember, the Fed wants the Core rate of PCE no higher than 2.0% and this morning's number wipes out any possibility of a fed rate cut over the next few months.   

Also of note, the Personal Savings Rate remains negative at -1.2%.  This poses many opportunities for you to help your clients and relationship partners.  We have received so many wonderful emails and success stories from people literally dialing for dollars and using the Average Weighted Interest Rate calculator to help people save money.  Please listen to the most recent MMG Minutes, where both Barry and Sue lay out the groundwork for you to gain an extra loan every two hours.  The negative savings rate also underscores the need for a wealth creation mortgage plan.  With this in mind, we will be rolling out a new wealth creation kit in the next couple of weeks to help you.

The Chicago Purchasing Managers Index  was reported at 61.7, which was not only past expectations of 49.5, but was the largest monthly gain in the history of the 39-year old index.  Needless to say this number was hot and suggests that the economy continues to expand. 

This morning's initial pop higher in prices after the release of both stronger economic news and higher inflation numbers really made no sense.  But the euphoria has worn off and the Bond's advance was stopped in its tracks by the 100-day Moving Average.  Prices have now reversed, well off the best levels of the day, and are trading beneath the 50-day MA.  The next level of support lies at $98.71.  But should the Bond take out this floor, prices could drift lower still to test strong support at the 200-day MA, presently at $99.22 or a whopping 62bp lower than current levels.  Once again, the negative stochastic crossover from overbought levels proved to be a very accurate indicator.  The crossover and alert to lock have preserved 57bp in pricing in the past 7 days.