Interest Rate Roundup

Friday, October 12, 2007

PPI thoughts ... a billion here, a billion there ... and more

I'm going on a cruise next week -- nothing big, just a few days in the Bahamas and Key West. But when you have two kids ... the grandparents are willing to babysit ... and you haven't been completely away from your screens for a long time ... you just have to jump on the opportunity! And that's exactly what my wife and I are doing.

Why mention this? Because I'm trying to wrap up a million things before I leave and I don't have much time to blog. But I can't leave you, gentle reader, completely empty handed, so here are some quick hits ...

* The Producer Price Index surged last month, rising 1.1% in September. That was more than double the 0.5% gain that was expected and it leaves the year-over-year rate of wholesale inflation at 4.4%, up from 2.2% a month earlier. Of course, if you're like me and you neither eat nor drive, then things look much better. "Core" inflation, which excludes those pesky things like food and energy, rose 0.1%, below the 0.2% forecast.

* In the other major economic release of the morning, retail sales jumped 0.6% in September, triple the 0.2% gain that was forecast. Retail sales rose 0.4% if you exclude autos, also a better reading than expected (0.3%).

* A billion here, a billion there, and pretty soon you're talking about real money. That's how the famous quote goes. And that's what came to mind when I read the latest news out of the home builder Centex Corp. It just announced almost $1 billion in charges to write down the value of land, property held by joint ventures and other assorted things. Net orders fell 13% year-over-year in the fiscal second quarter that ended Sept. 30.

* If you're a technical type, keep a close eye on the bonds here. Long bond futures are testing their recent uptrend and the 200-day moving average. Moreover, this 110-and-change level has served as support many times in the past couple of years. If these support levels give way, the bonds could fall hard.


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