16 May Floating bias
The CPI (Consumer Price Index) came in lower than expected, with the primary attribute being lower gas prices. The inflation read was lower than expected as well, which leads many to believe that the Fed has no reason to slow down the printing presses anytime in the near future. Housing reports were mixed, with Housing Starts lower than expected but Building Permits higher than anticipated. The surprise of the week so far was Initial Jobless Claims which came in at 360,000. That’s the highest figure since March, and a break of the recent trend of better news reading jobs. It’s only one report, and the markets are shrugging off any negative perspective as all indexes are positive for now. mortgage bonds seem to have a differing perspective, as they are currently up 50 basis points. This is a welcome price move after sliding over 200 basis points in 10 short days. mortgage bonds have struggled at the close of the last few days, so we will start with a floating bias as long as prices hold the majority of their gains throughout the day.