CPI Report

The Consumer Price Index was flat compared to last month but down compared to last July. A couple of quick thoughts on what that might mean for the mortgage world:
1. If it was seen that the financial world is still coming to an end, then it could push rates down. But most people believe that we’ve “stepped back” from the edge of the financial abyss.
2. So, most of the drop in the CPI happened “earlier” and the fact that it has leveled off tends to mean that we’re looking at a bottoming of the deflation risk (keeping in mind that 1 month does not a trend make). That could actually put upward pressure on rates.

So, overall, I expect that this is not something that’s going to put downward pressure on rates but potentially the opposite.

More later.

Tom Vanderwell

CPI – Consumer Prices

The CPI came out today and it was kind of a “mixed” report.   Why mixed?

• inflation was up for the first time in three months which was good because it decreases the chance that deflation is going to be a big problem.
• The majority of the increase in inflation came from energy prices, so it wasn’t anywhere close to “across the board” price increases.

So, this is not a report that’s going to end up being a market mover, but it’s also one that puts a bit of resistance in the market to lower rates.  

Tom Vanderwell

U.S. consumer prices inch 0.1% higher in May – MarketWatch

U.S. consumer prices increased a seasonally adjusted 0.1% in May as falling food prices largely offset higher gasoline prices, the Labor Department reported Wednesday.

It was the first increase in three months in the consumer price index, which tracks inflation at the retail level.

The core CPI — which excludes often-volatile prices for food and energy — also rose a seasonally adjusted 0.1% last month. Read the full Labor Department report.

The 0.1% rise in the headline CPI for May was much lower than the 0.3% forecast by economists surveyed by MarketWatch. The consensus on the 0.1% gain in core CPI was on the mark. See Economic Calendar.

Consumer Price Index

Consumer prices show smallest gain in 54 years – MarketWatch

In another sign of the depth of the global economic slowdown, U.S. consumer prices increased just 0.1% in 2008, the smallest increase in 54 years, the Labor Department reported Friday.

The consumer price index fell 0.7% in December, the third decline in a row, led by an 8.3% drop in energy prices and a 0.1% drop in food prices. Economists surveyed by MarketWatch expected a 0.8% decline.

Consumer prices show smallest gain in 54 years – MarketWatch.

So, inflation came in at the smallest increase in 54 years and down in December.   But it came in “less bad” than expected.

I don’t expect this to be as much of a news maker today as the bailouts of Bank of America and Citibank.

More on that later.

Tom Vanderwell

CPI Report

Came in down 1.7% for the month of November.   That was a larger decrease than expected and raises the worries about deflation.

It was the largest drop in consumer prices since 1932.

Tom

A Glance at Today….

Here’s an overview of what the markets are looking at today:

Consumer Price Index – expect it to show that prices dropped.

Housing Starts – expect them to be down.

The Fed – I’ll have more this afternoon, but here’s my thoughts on what’s going to happen:

• They will cut rates by at least .50%.
• They will talk a good story about how they are going to do additional things to help out the economy.
• I don’t expect the markets react that much if at all to what the Fed does, the interesting thing will be what they say.   Stay tuned.

Tom Vanderwell

Consumer prices fall record 1% on record energy drop – MarketWatch

U.S. consumer prices declined a record 1% in October, seasonally adjusted, as energy prices fell a record 8.6%, the Labor Department reported Wednesday. Data on the overall CPI date back to 1947, and the energy data go back to 1957.

Meanwhile, food prices in October rose 0.3%, the smallest gain since May.

The core consumer price index – which excludes food and energy prices – fell 0.1%, the first time there’s been a decline in the core rate since 1982.

Economists surveyed by MarketWatch had expected the overall October CPI to fall 0.9%, and for the core to rise 0.1%.

Consumer prices fall record 1% on record energy drop – MarketWatch.

Okay, let’s look at this step by step:

1. The overall CPI dropped 1% – mainly because energy fell 8.6%.   No surprises there, except for the fact that it’s the largest drop on record and they’ve been keeping the records since my Dad was 10.

2. Food prices rose .3% but that’s the smallest gain since May.

3. Core consumer prices (without food and energy) dropped .1%.   Normally this would be a market moving event and so far this morning, the 10 year bond is plummeting.   Time will tell if mortgage rates will follow or whether other issues will counteract that with mortgages.

Stay tuned, could be an interesting day!

Tom Vanderwell