Daily Commentary by Larry Baer: Mortgage investors took just a moment from monitoring the deteriorating financial situation in the euro-zone to cast a glance at two major domestic economic reports.
The Labor Department announced this morning a measure of prices paid at the factory gate, the producer price index, declined a stronger-than-expected 0.3% in October, after posting a 0.8% gain in September. The so-called core measure, which excludes the more volatile food and energy components, was unchanged, marking the first time without an increase since November 2010.
In a separate report Commerce Department figures revealed October Retail Sales climbed 0.5% higher, after a 1.1% gain a month earlier. It was the second strongest pace of growth since March. Excluding autos, retail sales posed a solid 0.6% gain last month after notching a 0.5% improvement in September.
From a mortgage investor's perspective rising retail sales in an environment of benign inflation pressures is not a major worry.
With capital still flowing from European asset classes into the relative safety of dollar denominated assets like Treasury debt obligations and agency eligible mortgage-backed securities -- the key supports remain in place for a period of steady to fractionally lower mortgage interest rates here at home. Against this "flight-to-quality" backdrop -- today's macro-economic report tandem of the October Producer Price Index and Retail Sales were essentially non-events.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
