Market Insider
Prior to 8:30 the interest rate markets were unchanged, at 8:30 April consumer price index was up 0.4% in line with forecasts, excluding food and energy +0.2% also about n line. Yr/yr overall CPI +3.2% up frm +2.7% in March, excluding food and energy +1.3% up frm +1.2% in March. The yr/yr CPI the highest in 3.5 years, mostly on oil and gasoline price increases. Inflation at the wholesale and intermediate levels is climbing but so far price increases have not yet filtered down to consumers, although the core did increase from March to April.
Treasury auctions are over now until a week after next, the 10 yr auction went well while the 30 yr bond yesterday didn't see as much demand. Treasuries and mortgages lost ground yesterday; this mooring treasuries and mortgages are better on the CPI. Yesterday's increase in the producer price index rattled markets a little, today the CPI was tame and added some buying of treasuries and leading to increases in mortgage prices.
The 10 yr treasury still has momentum, the overbought technical condition we had been watching has now been alleviated, the note is no longer overbought based on our models, nevertheless the 10 is stuck at these levels, unable to break resistance at 3.14% set early in March. Mortgage rates also in the same situation and will not move much lower n rate unless the 10 yr note cracks and holds below 3.14% (currently at 3.19%). All that said, on the other perspective traders and investors are still holding firm with little momentary interest to abandon long bond market positions. No selling, and no buying keeping interest rates stable over the past week.
The commodity markets continue to trade in volatile moves; today early crude oil ran back above $100.00 then backed off. Gold early unchanged. Political turmoil in the mid-East isn't cooling with increased fighting in Libya and Yemen will likely keep oil frm sliding with the weekend ahead.
The final data point this week, at 9:55 the U. of Michigan consumer sentiment index for mid-May, expected at 69.5 frm 69.8, was higher at 72.4, the 12 month outlook 83 frm 74, current conditions 80.2 frm 82.5 Generally better than expected but no reaction to it in either equity indexes or the bond and mortgage markets.
Have a GREAT weekend!
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