Friday, January 20, 2012

Mortgage Market Commentary January 20, 2012

The bond market is selling off a a little this morning, somewhat contrary to the tone of the data.
In Canada, Inflation for December was released this morning and was much weaker than expected. The CPI declined -0.6% m/m (-0.2% exp.) to register a +2.3% y/y reading (+2.7% exp.), while the Core CPI used by the Bank of Canada declined -0.5% m/m (-0.2% exp.) to register a +1.9% y/y reading (+1.9% exp.). Clothing & Footwear, Transportation, Energy & Gasoline were among the drivers of this month over month deflation.

Staying in Canada, Wholesale Sales growth of -0.4% in November was also weaker than the +0.5% print that the market had forecast.

There is no major data out in the US just yet (Existing Home Sales due at 10am EST) but equity markets have opened flat / slightly lower on weak earnings reports.

Normally the market would be rallying given the above, so the selloff is probably little more than a bit of profit-taking.

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