http://MikesDailyMarketReport.com: The Personal Income jumped up to 10.0% in January and the Consumer jumped up 2.4%. Meanwhile, Inflation still shows some tameness, as the Personal Consumption Expenditure (PCE) rose 0.3% in January, while it's YoY bumped up from 1.3% to 1.5%. However, the Core PCE (excludes food and energy), which carries more weight because it's the Fed's favorite gauge for inflation, remained Unchanged at 1.5% YoY after it (too) rose 0.3% in January. The Fed's target rate is typically 2.0% for this index; however, it indicated that it's willing to expand it to 2.5% average over time. The Chicago PMI, which measures manufacturing in the Chicago region, dipped from 63.8 to 59.5 in February. Lastly, the Consumer Sentiment dropped from 79.0 in January to 76.8 in February (it did improve throughout the month, as it's initial reading in February was 76.2). Stocks are currently in Mixed Territory, as the DOW remained the lone index in Negative Territory. The big spike in Yields is the culprit behind the Market volatility this week. One thing about Yields is that it provides a perception of Inflation, as an increase in rates is used to slow things down to stave off inflation. Investors were concerned that the Fed would raise the Fed Fund Rate sooner, as well as pull back on their Asset Purchases. But Fed Chair Powell had temporarily eased those concerns during his 2 day Congressional Testimony. However, Investors began to disregard those sentiments, as the Markets became choppy again. While stocks enjoyed the low interest rate environment, now investors are reevaluating their stock positions that are most affected by rising rates, which the Tech Sector has been hit the hardest thus far. The higher Yields may bring more investors back to the table for Treasuries/Bond related investments. MBS went thru a wild rollercoaster ride yesterday, as it closed Down 94bps, which is approximately 1 point (so a No Point loan would now cost 1 point, or 1% of the loan balance). It's still very choppy, as you may see the wicks in the candlestick chart, but it's currently Up 2bps. Mortgage Rates are about the same after yesterday's close; however, way off from yesterday morning, as most Lenders had multiple price changes to their rate sheets yesterday (for the worse). Yields are also really choppy, as it's currently just under 1.52%, but it's been going back-and-forth at 1.47% range. Hopefully, today's PCE data helped to ease some concerns over inflation. We'll see!
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