Producer Price Index (PPI)
Besides the 30-year Bond auction, tomorrow also has an important economic release. November's Producer Price Index (PPI) will be posted at 8:30 AM ET tomorrow morning. It shows inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices, giving a more stable reading for analysts to consider. If it reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively. That would drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market could respond by pushing mortgage rates slightly lower. Analysts are expecting a 0.4% increase in the overall index and a 0.2% rise in the core data.