Inflation at the wholesale level declined in December due in part to a drop in energy costs. The December Producer Price Index (PPI) fell 0.2% versus the -0.1% expected while the Core rate declined 0.1%, below the +0.2% expected. The tame PPI report comes after last week's tame Consumer Price Index, reinforcing the notion that overall inflation remains contained. This is good for long-term rates, like mortgages.
Business activity grew slightly in January and well below what was seen in December. The January Empire Manufacturing Index fell to 3.9 from 11.5 in December and well below the 12.2 expected. It was the lowest reading in over a year and the forecast read that the firms surveyed were less optimistic about the six-month outlook than they were last month. Within the data it showed that labor market indicators pointed towards a modest increase in employment and hours worked.
The biggest bank by assets in the U.S. reported mixed earnings in the latest quarter's data with its mortgage banking numbers taking a hit. JPMorgan Chase reports that revenues slid further in the fourth quarter but were up from the same period last year. The banks home lending sector dropped 8% driven lower by a decline in net production and lower volumes.
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