Daily Market Update 1/15/09

Rates were little changed Thursday following the release of December’s Producer Price Index (PPI) and the latest weekly Jobless Claims data. The PPI fell 1.9% last month, in line with expectations. The more closely watched “core rate”, excluding volatile food and energy components, rose 0.2%, above consensus. Weekly Jobless Claims rose to 524,000, up from 467K the previous week. House Democrats proposed an $825 billion stimulus package that included $550 billion additional spending and tax cuts of $275 billion. Although the proposal is a first step and remains a long way from passage, the announcement appeared to weigh heavily on mortgage-backed securities markets due to concerns over the growing budget deficit. In other news, Freddie Mac said average mortgage rates hit 4.96% last week with 0.7 “points”, the lowest level since tracking began in 1971.

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