A majority of market participants (or their mentors) were steeped in the extraordinary inflation/rate volatility of the late 70's and early 80's.  As the recovery from the financial crisis began, and as the Fed was pumping trillions of dollars back into the system, these market participants thus had an unhealthy fear of every little uptick in inflation at first.  As reality unfolded, we've seen that worrying about inflation was a waste of energy at best, and a fool's errand at worst.  I know I had a great time making fun of them from 2011-2015 at least. Things began to change in late 2015.  Inflation began a quick and unequivocal return to relevance as core CPI shot up from a steady, depressed state at 1.6-1.7 to 2.3% by Febraury 2016.  Had it not been for Brexit, we likely would have seen more of a correlated pressure on interest rates as a result.  The old dogs would finally have their day!  Inflation was coming back and they were about to be vindicated.   Then, heading into the summer of 2017, core CPI mysteriously fell off a cliff again.  And bonds were clearly willing to react.  Several  of the biggest, best days for bonds in 2017 coincided with CPI reports that showed core y/y consumer prices remaining in a 1.6-1.7 range.  But hey!  At least a correlation between inflation data and bond market movement was getting reestablished. In the past 2 reports, we saw core inflation attempt to move back up to 1.8% only to fall back to 1.7% in the most recent report.  Now today's numbers call for 1.7% again.  If the number deviates from that consensus--especially if it's by more than 0.1%, we can expect a reaction in the logical direction.  That said, we also might be more interested in Retail Sales for the month of December released at the same time.   Forecasters think Retail Sales will be weaker than in November.  There's a risk they're failing to account for the intangible motivations of tax planning (i.e. people and businesses trying to by "stuff" in 2017 where the write-offs will have done more to minimize tax burdens relative to 2018).  Bottom line, if inflation ticks up and Retail Sales surprise to the upside, it's back to the selling spree.  

January 12, 2018 Download our Mobile App: Download our Mobile App: Rob Chrisman Broker News; Mergers/Acquisitions; Guild to Buy Cornerstone Plenty of people tell me that I’m “long in the tooth.” (A way of gauging a horse’s age.) Tooth? Thanks to Emily W. for sending in something that all of us have probably wondered about, even though you weren’t aware that ... (read more) MBS Commentary MBS Live Day Ahead: CPI is the New NFP, Sometimes A majority of market participants (or their mentors) were steeped in the extraordinary inflation/rate volatility of the late 70's and early 80's.  As the recovery from the financial crisis began, and as the Fed was pumping trillions of doll... (read more) Housing News Growing Concerns Over VA Loan Churning A Ginnie Mae official told Congress this week that his agency has growing concerns over the incidence of "loan churning" in the VA mortgage program. Michel R. Bright, Ginnie Mae's Executive Vice President and COO was among four mortgage industry expe... (read more) Mortgage Rate Watch Mortgage Rates Catch a Break With Help From Treasuries Mortgage rates caught a break today, moving lower for the first time this week and pushing back from the highest levels since early July 2017. Like yesterday, strong demand at a Treasury auction helped US bond markets, but notably, only the longer-te... (read more) Housing News New Home Sales Defy Holiday Lull, Rising in December Despite the usual holiday lull in overall mortgage applications, the demand for newly constructed homes increased in December. The Mortgage Bankers Association (MBA) said its Builder Applications Survey (BAS) found those applications were up 18 perce... (read more) MBS Commentary MBS Live Recap: Another Strong Auction Helps Bonds After China News Debunked Yesterday morning's news regarding China potentially buying fewer (or selling) US Treasuries has been a big talking point.  While most pundits and even a few traders jumped on the bandwagon right off the bat, we immediately flagged it as a Red ... (read more) Mortgage Rates 30 Yr. Fixed Rate 6.78% +0.01% Rate Change Points Mortgage News Daily 30 Yr. Fixed 6.78% +0.01 0.00 15 Yr. Fixed 6.04% +0.01 0.00 30 Yr. FHA 6.36% +0.01 0.00 30 Yr. Jumbo 6.90% 0.00 0.00 7/6 SOFR ARM 6.25% 0.00 0.00 30 Yr. VA 6.38% +0.02 0.00 Updates Daily - Last Update: 7/23 15 Yr. Fixed Rate 6.04% +0.01% Rate Change Points Freddie Mac 30 Yr. Fixed 6.75% +0.03 0.00 15 Yr. Fixed 5.92% +0.06 0.00 Updates Weekly - Last Update: 7/17 Rate Change Points Mortgage Bankers Assoc. 30 Yr. Fixed 6.84% +0.02 0.62 15 Yr. Fixed 6.14% +0.03 0.69 30 Yr. Jumbo 6.75% -0.06 0.70 Updates Weekly - Last Update: 7/23 MBS / Treasuries UMBS 30YR 5.5 99.38 -0.13 Price / Yield Change MBS UMBS 5.5 99.40 -0.11 UMBS 6.0 101.32 -0.07 GNMA 5.5 99.69 -0.09 GNMA 6.0 101.31 -0.02 Pricing as of: 7/23 3:44PM EST 10 Year US Treasury 4.3788 +0.0328 Price / Yield Change US Treasury 2 YR Treasury 3.877 +0.048 5 YR Treasury 3.926 +0.041 7 YR Treasury 4.138 +0.039 10 YR Treasury 4.380 +0.034 30 YR Treasury 4.942 +0.025 Pricing as of: 7/23 3:44PM EST Latest Video Santelli Exchange: 'Summer' time in January Wells Fargo's Mike Mayo: Why to bet on the big banks for 2018 Business inventories up 0.4% in November Around the Web NAR - Realtor.com Palm Beach Notches Big-Ticket Home Sales CNBC One former Fed governor is worried that no one is worried about the strong economy CNBC Bonds entering the danger zone,' market watcher says Bloomberg Death of Bond Bull Market Exaggerated as Volatility Signals Calm Reuters Federal Reserve fines five banks to wrap up mortgage servicing charges NY Times For Bond Investors, Low Expectations in a Low-Yield World CNBC Markets getting increasingly comfortable with more rate hikes this year CNBC Business inventories up 0.4% in November vs expectation of 0.2% gain CNBC 2-year Treasury yield tops 2% for the first time since 2008 as inflation rises CNBC US core consumer prices post biggest gain in 11 months CNBC US retail sales rise, while core sales are revised sharply higher CNBC Wells Fargo beats earnings estimates but just misses on revenue Reuters JPMorgan profit beats on higher interest rates; debt trading down

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