November 18th, 2009 9:52 AM by Mel Samick
Tuesday's bond market opened in negative territory despite some extremely favorable economic news. The stock markets are showing minor gains with the Dow up 30 points and the Nasdaq up 6 points. The bond market is currently down 12/32, which will likely keep this morning's mortgage rates close to yesterday's levels.The Labor Department gave us the first and more important of today's two relevant economic reports. They announced that the Producer Price Index (PPI) rose 0.3% last month, falling short of expectations. However, the big news was the core data reading that fell 0.6% when it was expected to rise 0.1%. This means that inflationary pressures at the producer level of the economy were well below what analysts had thought. That is very good news for bonds and mortgage rates, but it appears that the bond market was not too impressed with this morning's news.The second report of the morning was October's Industrial Production data. It showed that output at U.S. factories, mines and utilities rose only 0.1% when it was expected to rise 0.4%. This is also good news for bonds because rapid increases in manufacturing activity indicates a strengthening economy.