Good News, Bad NEws For Mortgage Bonds

Yesterday the Producer Price Index(PPI), which measures wholesale inflation, showed a mixed read on inflationary pressures. This was viewed negatively by the Bond market, the bad news, and the market was off. Today, the Consumer Price Index(CPI) had some good inflation news and the market has been improving. The CPI for July was reported at 0.1% and the more closely watched Core CPI at 0.2%. This was in line with expectations and suggests that Core Inflation may be stable to moderating.