Interest Rate Roundup

Tuesday, October 17, 2006

Quick data hits

Some quick hits on today's plethora of economic data:

1) PPI -- Producer Prices fell 1.3% MOM, but that was expected due to the big drop in energy prices. Core PPI jumped 0.6% vs. forecasts for a 0.2% gain. So is that a sure sign of blowout inflation? Well, not really because a good part of it stemmed from a major jump in the price of passenger cars and light trucks (and those price categories had PLUNGED the month before). Long story short, the gubmint seems to be having one heck of a time acounting for model year changeover in auto prices.

2) IP/CAP-U -- That's industrial production and capacity utilization to the non-jargon types out there. Both were weaker than expected. But here too, a big plunge in utility output (weather related) helped skew the numbers lower.

3) NAHB -- This is the National Association of Home Builders Index that comes out each month. The measure ... gasp ... actually rose 1 point to 31 from 30 amid optimism that the downtick in interest rates and energy prices might help bolster sales. Of course, when you consider the index has plunged in a virtual straight line from its peak of 72 in June 2005 ... and when you realize readings of 30/31 are the worst we've seen since early 1991 ... it kind of puts some perspective on the overall state of housing.

Tomorrow's CPI is obviously the next major news item for the bond market. Expectations call for a 0.3% headline drop and a 0.2% "core" gain.


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