Fundamentals Mixed. Volatility Enormous.

PPI-FD (September 2014)

This measures inflation at the wholesale level.

PPI-FD month/month -0.1%. Previous was +0.0

PPI-FD year/year  +1.6%. Previous was +1.8%

PPI-FD less food & energy month/month  0.0%. Previous was +0.1%

PPI-FD less food & energy year/year    +1.8%. Previous was +1.6%

PPI-FD less food, energy & trade services month/month   -0.1%. Previous was  +0.2%

PPI-FD less food, energy & trade services year/year   +1.7%

PPI-FD Goods month/month   -0.2%. Previous was -0.3%

PPI-FD Goods year/year    +1.6%. Previous was +1.7%

PPI-FD Services month/month  -0.1%. Previous was +0.3%

PPI-FD Services year/year    +1.6%. Previous was +1.9%.

This non-existing inflation gives the Fed an excuse to continue with low rates and expanding money supply.

 

MBA Applications (week ended 10/10/2014)

– Purchase Index Week/Week -1.0%. Previous weeks were +2.0%, +0.0%, -0.3%, +5.0%, -3.0%, -2.0%, +3.0%, -0.4%, -1.0%, -1.0%. +0.2%, and +0.3%.

– Refinance Index Week/Week +11.0%. Previous weeks were +5.0%, -0.3%, -7.0%, +10.0%, -11.0%, +1.0%, +3.0%, +3.0%, -4.0%, +4.0%, and -4.0%.

– Composite Index Week/Week -5,6%. Previous weeks were +3.8%, -0.2%, -4.1%, +7.9%, -7.2%, +0.2%, +2.8%, +1.4%, -2.7%, +1.6%, and -2.2%.

Purchase Applications are -4.0% year-on-year.  Refinance applications spiked as rates fell because of the bullish technicals on Treasuries. Not only is the market bullish but volatility is enormous.

 

Retail Sales (September 2014)

– Retail Sales month/month -0.3%. Previous was +0.6% – Retail Sales less autos month/month  -0.2%. Previous was +0.3% – Less Autos & Gas month/month -0.1 %. Previous was +0.5%.

This will be of concern for GDP if this becomes a trend.

 

Business Inventories (August 2014)

– Inventories month/month  +0.2%. Previous was +0.4%.

A word on Treasury yields:  while the market confirmed the call we made in May 2014 that the 10-year yield would drop to 2.25% or below it did so with gigantic volatility.  This sent the 10-year to a low of 1.868% this morning and will help establish new lows for mortgage rates.