http://MikesDailyMarketReport.com: The data that we've been waiting all week has come; and it was a little worse than anticipated! The Consumer Price Index (CPI) rose by 0.6% for the month of January; as did the Core CPI (excluding food & energy). The YoY for for CPI rose from 7.0% in December to 7.5% in January; and the Core CPI rose from 5.5% to 6.0%. This data is the hottest last seen since 1982 when Fed Chair Volker raised interest rates all the way to about 18%. We probably won't see that high of rates, but they are rising. This adds to the increased probability of the Fed raising it's rate hike in March by 0.5% (in lieu of the usual 0.25% increment). One thing to note, is that the effect of these hikes doesn't not happen immediately, but approximately 6 months before we feel it in the economy. Both Stocks and MBS dropped dramatically after the reading! MBS was Down about 65bps; and when Fed Member Bullard mentioned that he'd be in favor of a 0.5% rate hike and raising rates by 100bps by it's July meeting, then the Markets dropped further (MBS was Down about 85bps). As I was doing the video, MBS was subsiding a bit and was Down around the 65bps point again. On the other note, Yields finally reached the 2.0% threshold, as it is currently just under 2.03%. Now another piece of economic data that was released today was the Initial Jobless Claims, which came in with 223k people applying for first time benefits. This is relatively important, but the CPI report is the main focus for investors today!
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