Monday and Tuesday there was tight trading range in the bond market and then BAMM!

Wednesday the CPI was up 0.5% with the core index up 0.3% which was a larger jump than expected. Keep in mind that the core index is where the government takes out the food and energy costs which are the most volatile of that “bundle”of household expenses used to create the index.

Retail sales were down 0.3%, and excluding autos it was unchanged. Investors reacted to that CPI data which caused bond prices to drop 18 basis points (or bps) causing rates to jump up 0.125% – 0.25% in one day.

Thursday data on industrial production was neutral coming in down 0.1% and capacity utilization came in at 77.5%.

Friday markets started swinging back to pre-Wednesday levels but the data was very interesting and one would assume it’s in reaction to the housing crisis.

Housing starts were up 9.7% BUT the lead came from 6% jump in multifamily housing (apartment buildings) and only 3% from single family homes. The Permits were up 7.4% BUT again being lead by the multi-family buildings, not the single family home builders (they were actually down 1.7%). Multifamily permits were up 37.8% year over year.

Interest rates are now as high as they were in 2014 AND 0.5% higher than February last year.

Next week’s economic data outlook: Look for the existing home sales data to hit the mark but most importantly, the U.S.  will be looking to sell $92 billion in treasury notes (2, 5 and 7 year terms). That’s a LOT of product to hit the market, and we hope that investors worldwide still have an appetite for U.S. debt. If not, look for higher rates and shakiness…