10-Year Treasury Yield
U.S. Treasury yields were slightly lower Monday as investors looked ahead to key economic data and fresh comments from Federal Reserve officials that could provide hints about the interest rate outlook.The yield on the 10-year Treasury was last down more than 2 basis points at 4.16%. The 2-year Treasury yield was nearly two basis points lower at 4.47%.
Treasury Statement
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CPI - Consumer Price Index
U.S. consumer prices increased more than expected in January amid rises in the costs of shelter and healthcare, but the pick-up in inflation likely does not change expectations that the Federal Reserve will start cutting interest rates in the first half of this year. The consumer price index (CPI) increased 0.3% last month after gaining 0.2% in December, the Labor Department's Bureau of Labor Statistics said on Tuesday. Annual revisions to the CPI data published last Friday were mixed, but generally showed inflation was on a downward trend after surging in 2022. In the 12 months through January, the CPI increased 3.1%. That followed a 3.4% advance in December. Economists polled by Reuters had forecast the CPI gaining 0.2% on the month and rising 2.9% year-on-year. The annual increase in consumer prices has moderated from a peak of 9.1% in June 2022.
MBA Purchase Applications
Total mortgage application volume fell 2.3% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.87% last week from 6.80% the week before. Applications to refinance a home loan fell 2% for the week but were 12% higher than the same week one year ago. Applications for a mortgage to purchase a home dropped 3% for the week and were 12% lower than the same week a year ago. Applications to refinance a home loan, which are most sensitive to weekly rate changes, fell 2% for the week but were 12% higher than the same week one year ago. Rates are still about one-half a percentage point higher now than they were a year ago, but the recent drop in rates from a 20-year high last fall has brought more borrowers out looking for any savings they can get. The vast majority of current borrowers, however, have loans with rates far lower than those available today.
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Jobless Claims
A separate economic report Thursday showed continuing labor market strength, another critical bedrock for the economic picture. Initial claims for unemployment insurance totaled 212,000 for the week ended Feb. 10, a decline of 8,000 from the previous week’s upwardly revised total and below the estimate for 220,000, the Labor Department reported. Continuing claims, which run a week behind, totaled just shy of 1.9 million, up 30,000 on the week and higher than the 1.88 million estimate.
Retail Sales
Retail sales tumbled 0.8% in January, much more than expected. Advance retail sales declined 0.8% for January, down from a 0.4% gain in December and worse than the estimate for a 0.3% drop. Consumer spending fell sharply in January, presenting a potential early danger sign for the economy, the Commerce Department reported Thursday. Advance retail sales declined 0.8% for the month following a downwardly revised 0.4% gain in December, according to the Census Bureau. A decrease had been expected: Economists surveyed by Dow Jones were looking for a drop of 0.3%, in part to make up for seasonal distortions that probably boosted December’s number.
Philadelphia Fed Mfg index
There also was some good news on the manufacturing front, as regional surveys in the Federal Reserve’s Philadelphia and New York districts both came in better than expected for February. The Philadelphia survey showed a reading of 5.2, up 16 points and better than the -8 estimate, while the Empire State survey for New York was at -2.4. Although the New York survey still indicated contraction, it was a much better reading than January’s -43.7 and the -15 estimate. The surveys measure the share of companies reporting growth, so a positive reading indicates expansion.
Empire State Manufacturing
Manufacturing activity edged slightly lower in New York State, according to the Empire State Manufacturing February survey. The diffusion index for General Business Conditions rose to -2.4 from -43.7 in January. This morning's reading was better than the forecast of -13.7.
Import and Exports
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Industrial and Production
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Busieness and Inve
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HMI
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TIC
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Mortgage Rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.87% last week from 6.80% the week before, with points increasing to 0.65 from 0.59 (including the origination fee) for loans with a 20% down payment. That is the highest rate since early December 2023.
Sttrats of Starts
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Permits and Exports
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PPI
January wholesale prices rise more than expected, another sign of persistent inflation. The producer price index, a measure of prices received by producers of domestic goods and services, rose 0.3% for the month, the biggest move since August. Economists surveyed by Dow Jones had been looking for an increase of just 0.1%. PPI fell 0.2% in December. Excluding food and energy, core PPI increased 0.5%, also against expectations for a 0.1% gain. PPI excluding food, energy and trade services jumped 0.6%, its biggest one-month advance since January 2023. On a 12-month basis, headline PPI increased just 0.9%, slightly lower than the 1% level in December. However, excluding food, energy and trade services, the index rose 2.6%.
Cosnumer Sentimen
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