Daily Commentary by Larry Baer: Fed
Chairman Bernanke appeared before the Senate Banking Committee earlier this
morning to testify regarding monetary policy issues. He told lawmakers the nation's economic
recovery is being held back by tighter financial conditions due to Europe's
debt crisis and uncertainty surrounding U.S.
fiscal policy. Bernanke repeated his
warning about the importance of the immediate need for congressional action
related to developing a credible long-term plan to reduce U.S.
government debt levels while avoiding sharp spending cuts and tax hikes in the
near future. It was as though he was
reading exactly from the script mortgage investors had previously written for
him -- which rendered the whole thing a non-event as far as its influence on
the current trend trajectory of mortgage interest rates.
The day's other economic news was equally
uninspiring in terms of its impact on the direction of mortgage interest
rates. Consumer prices were flat in June
as the cost of gasoline dropped - exactly in-line with expectations. Stripping out the more volatile food and
energy costs, the so called "core rate" of inflation at the consumer
level increased a benign 0.2% - its fourth consecutive monthly gain at that
rate.
In a separate report, the Fed said industrial
production grew 0.4% in June while utility companies, factories and mines saw
their capacity utilization rates edged up to 78.9% from 78.7%. The production number was stronger than the
majority of investors had anticipated - but the utilization rate was notably
lower than forecasts called for - so the whole thing was essentially shrugged
off.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
