Interest Rate Roundup

Tuesday, September 15, 2009

Inflation hot, sales strong, NY-area manufacturing improves

We just got a trifecta of economic reports and they all suggest the economy is recovering (and that the inflation picture is somewhat less benign). To wit:

* Retail sales surged 2.7% in August. That was much stronger than the 1.9% gain that was expected and the biggest rise in three years. But even if you exclude autos (where sales were boosted by the "Cash for Clunkers" program), you still get an increase of 1.1%, much hotter than the 0.4% rise that economists were looking for. That was the biggest rise in six months.

* The Empire Manufacturing index of New York-area activity rose to 18.9 in September from 12.1 in August. That was hotter than the 15 reading people were looking for and the highest reading in almost two years. The "prices paid" subindex jumped to 20.2 from 13.8, while the new orders subindex climbed to 19.8 from 13.4.

* The Producer Price Index surged 1.7% in August. That was more than double the 0.8% gain that was expected and a big swing from the -0.9% reading in July. The "core" PPI, which excludes food and energy, rose 0.2% against a forecast for 0.1%.

The aftermath? Stock futures are popping, while bond futures are down two-thirds of a point. The dollar is picking up a bit.

2 Comments:

  • Bank holidays, Treasury only money funds, you guys completely missed this you see the big picture clearly but that is of little good. Martin has dropped out of sight. No articles, nothing. I am frustrate that I place a lot faith in you analysis. I am disappointed.

    By Anonymous Anonymous, at September 15, 2009 at 12:32 PM  

  • While I agree that The Weiss Group missed it big time on this call, I am going to give it a little more time to see if their call on skyrocketing interest rates comes true. I too am loosing faith quickly, however. If it doesn't happen soon, just chalk up another strike to Martin and team. I took their advise and help up on buying long term Treasuries. I hope I didn't shoot myself in the foot. Goldman Sachs is calling for a yield slump, not a yield climb: http://www.bloomberg.com/apps/news?pid=20601087&sid=aCHLgUU21aTo

    By Anonymous Anonymous, at September 16, 2009 at 7:31 AM  

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