Jones Lang LaSalle
Interest Rate Commentary
Tuesday: 01/17/06 5:00 PM EST : Treasuries shrugged off earlier losses to finish unchanged at the short end and modestly higher at the longer end of the maturity spectrum. In the stock market, the indices spent the day in tight channels in negative territory. In late trading, the 10-Year Treasury Note was up by 5/32, lowering its yield to 4.33%; the Dow was down by 63.55 points to 10,896.32; and the Nasdaq was down by 14.35 points to 2,302.69.
The economic data of the day created some crosscurrents. The report on industrial production showed an expected pick-up in output last month but capacity utilization rose more than expected, stoking inflation fears. And the New York Fed's Empire State Index showed slightly weaker growth in the region's manufacturing sector this month than had been predicted, but elevated price indices also raised the specter of inflation.
However, the soggy stock market made Treasuries more attractive by comparison and the bond market slowly rose out of the red. Besides the inflation alarms, stocks were weighed down by a number of other factors. After the indices hit multi-year highs last week, traders are concerned that a consolidation may be imminent. The quarterly earnings report season is just beginning to heat up and a couple of disappoints could send stocks sharply lower.
So far, though, the market has been holding up relatively well. Despite today's losses, traders could have taken more profits as oil futures hit a three-and-a-half month high today. A barrel of light, sweet crude oil for next month delivery rose by $2.39 on the New York Mercantile Exchange to settle at $66.31. But the Dow only fell by 0.58% on the day; the S&P 500, 0.36%; and the Nasdaq, 0.62%.
Tomorrow, the issue of inflation takes center stage once again with the release of the Consumer Price Index. The data series has been jolted recently by oil-shocks, pushing it sharply higher in September and then down steeply in November. For December's reading, however, an in-trend increase of about 0.2% is predicted. A same sized increase is also anticipated at the core level, which excludes the volatile categories of food and energy. A tame reading would be welcomed by both markets.
The next meeting of the Fed's monetary policy committee will be held on the last day of the month and its approach will be heralded by tomorrow afternoon's release of the Beige Book, a summary of economic conditions which the committee uses as a reference in its deliberations.
Interest Rate Commentary
Tuesday: 01/17/06 5:00 PM EST : Treasuries shrugged off earlier losses to finish unchanged at the short end and modestly higher at the longer end of the maturity spectrum. In the stock market, the indices spent the day in tight channels in negative territory. In late trading, the 10-Year Treasury Note was up by 5/32, lowering its yield to 4.33%; the Dow was down by 63.55 points to 10,896.32; and the Nasdaq was down by 14.35 points to 2,302.69.
The economic data of the day created some crosscurrents. The report on industrial production showed an expected pick-up in output last month but capacity utilization rose more than expected, stoking inflation fears. And the New York Fed's Empire State Index showed slightly weaker growth in the region's manufacturing sector this month than had been predicted, but elevated price indices also raised the specter of inflation.
However, the soggy stock market made Treasuries more attractive by comparison and the bond market slowly rose out of the red. Besides the inflation alarms, stocks were weighed down by a number of other factors. After the indices hit multi-year highs last week, traders are concerned that a consolidation may be imminent. The quarterly earnings report season is just beginning to heat up and a couple of disappoints could send stocks sharply lower.
So far, though, the market has been holding up relatively well. Despite today's losses, traders could have taken more profits as oil futures hit a three-and-a-half month high today. A barrel of light, sweet crude oil for next month delivery rose by $2.39 on the New York Mercantile Exchange to settle at $66.31. But the Dow only fell by 0.58% on the day; the S&P 500, 0.36%; and the Nasdaq, 0.62%.
Tomorrow, the issue of inflation takes center stage once again with the release of the Consumer Price Index. The data series has been jolted recently by oil-shocks, pushing it sharply higher in September and then down steeply in November. For December's reading, however, an in-trend increase of about 0.2% is predicted. A same sized increase is also anticipated at the core level, which excludes the volatile categories of food and energy. A tame reading would be welcomed by both markets.
The next meeting of the Fed's monetary policy committee will be held on the last day of the month and its approach will be heralded by tomorrow afternoon's release of the Beige Book, a summary of economic conditions which the committee uses as a reference in its deliberations.
posted by Jones Lang LaSalle NJ News Blog at 10:30 AM
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