Daily Market Update 8/17/10

Rates inched higher Tuesday on mixed economic news. The Producer Price Index (PPI) rose 0.2% in July, matching expectations, but Core PPI, which excludes volatile food and energy components, rose more than forecast. July Housing Starts increased by 2%, while Building Permits, a leading indicator, fell by 3% to the lowest level since May 2009. Industrial Production jumped 1.0% in July, doubling the consensus forecast of +0.5%. Stocks moved higher. The Treasury begins a conference today to discuss the future of Fannie Mae and Freddie Mac. The two agencies have cost taxpayers nearly $150 billion since having been taken over by the government in 2008. Options range from full nationalization to full privatization, with a host of alternatives in between. No decision is expected until early next year.

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