Mel's Blog

January 2010 Market News #5

January 15th, 2010 4:24 PM by Mel Samick

Friday's bond market has opened in positive territory following early stock weakness. The stock markets are showing losses despite stronger than expected earnings results from giants Intel and JPMorgan Chase. The Dow is currently down nearly 100 points while the Nasdaq has fallen 24 points. This has made bonds more attractive to investors as a safe-haven. The end result is the bond market is up, which should improve this morning's mortgage rates.

The Labor Department reported early this morning that December's Consumer Price Index (CPI) rose 0.1% and that the more important core data reading increased 0.1%. The core data matched forecasts but the overall reading was slightly lower than expectations. The news is somewhat positive for bonds because it means inflationary pressures remained subdued at the consumer level of the economy. But since it nearly matched expectations, its impact on this morning's mortgage rates has been fairly minimal.

December's Industrial Production report was the second report of the morning. It revealed a 0.6% increase in out at U.S. factories, mines and utilities. That matched forecasts, indicating moderate growth in the manufacturing sector. But since it did not surprise traders, it had no influence on this morning's trading or mortgage rates.

The third and final report of the day was the University of Michigan's Index of Consumer Sentiment for December. It came in at 72.8, falling short of the 73.8 that was expected. This means that consumers were less optimistic about their own financial situations than many had thought. That can be considered favorable news for the bond market because waning confidence usually translates into less consumer spending and weaker economic activity.
                  
                                Mel

Posted in:General
Posted by Mel Samick on January 15th, 2010 4:24 PM

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