Updated on August 10, 2020 10:03:58 AM EDT
There is nothing of importance scheduled today. The rest of the week brings us the release of six pieces of monthly and quarterly economic reports, including a couple of highly important releases. In addition to the data, there are also two Treasury auctions set that may influence rates mid-week.
Julys Producer Price Index (PPI) will be posted at 8:30 AM ET tomorrow, giving us an important measurement of inflationary pressures at the producer level of the economy. There are two readings that analysts follow in this release. They are the overall index and the core data reading. The core data is the more important of the two since it excludes more volatile food and energy prices. Analysts are predicting an increase of 0.3% in the overall index and a rise of 0.1% in the core reading. Stronger than expected readings may raise inflation concerns in the bond market. That would be bad news for bonds and mortgage rates because inflation is the number one nemesis of the bond market as it erodes the value of a bonds future fixed interest payments. As inflation becomes more of a concern in the markets, bonds become less appealing to investors, leading to falling prices, rising yields and higher mortgage rates.
Overall, Friday is the best candidate for most active day for rates due to the number of economic releases and the importance of the Retail Sales report. That said, it is fairly safe to assume that we will see plenty of movement in rates this week. The importance of some of the data, the fact that bonds are testing a key resistance level again and what is likely to be plenty of political and aid package headlines make it high likely rates will move noticeably multiple days. Therefore, it would be prudent to watch the markets closely if still floating an interest rate and closing in the near future.
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