Core CPI Contained. Industrial Production Recovers. Homebuilder Index up.

MBS markets holding even today after big gains yesterday to start the week which helped lower rates. Tomorrow begins Bernanke’s question-taking on Capitol Hill, and will likely add volatility to bond/rate markets. Below is a roundup of today’s U.S. economic fundamentals.

Consumer Price Index  (June 2013)
– CPI core (less food & energy) Month/Month +0.2%. Previous was +0.2%.

– CPI core less food & energy Year/Year  +1.6 %. Previous was +1.7 %

– CPI overall Month/Month  0.5%.  Previous was +0.1%

– CPI overall Year/Year  +1.8 %. Previous was +1.4%.

This is one of those months when the two-sided nature of inflation (core and overall) is most apparent. Core is contained with month/month the same as previous and year/year down slightly.  Overall spiked up on higher gas prices (+6.3%).  The consumer has less discretionary spending available because of higher energy prices but energy prices tend to move up and down while core shows the longer term trend.

In my view it is always core which should be regarded as showing what’s is happening with the economy.

Chain Store Sales  (week ended 7/13/2013)
– Store Sales Week/Week -1.1%. Previous was +3.0%.

– Store Sales – Y/Y 2.9 % 1.7 %. Previous was +2.9%

ICSC-Goldman Store Sales
– Store Sales Week/Week  -1.1%
– Store Sales Year/Year +1.7%. Previous was +2.9%.

Redbook
– Store Sales Year/Year +3.0%. Previous week was +3.6%.

– Recall that last week I noted that “The Consumer Metrics Institute Daily Absolute Demand Index of online discretionary spending showed that spike but then tapered off starting this past Sunday.  Those Chain Store Sales gains of last week may not hold.”

Industrial Production (June 2013)
– Industrial Production Month/Month 0.3%. Previous was +0.0%

– Capacity Utilization Rate 77.8%. Previous was 77.6%.

– Manufacturing Month/Month 0.3%.  Previous was +0.1%.

– Industrial Production was flat in May and -0.3% in April so what we have is 3 months of going nowhere.

Homebuilder Confidence Index (July 2013)

– Housing Market Index 57. Previous was 52.

– The is the NAHB (Homebuilder) Index and it is strong.  Since this data was so bad for so long an evenly paced return to the natural level of 1,500,000 Housing Starts should be the objective.