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Daily Market Update 11/1/10

Rates were little changed Monday following the release of mixed economic data. Mortgage-backed securities (MBS) markets have been volatile. MBS prices initially rose on news that September Personal Income fell 0.1%, below the consensus forecast of +0.2%. The Core PCE price index rose at a tame 1.2% annual rate, indicating inflation is not a concern in the near term. MSB prices gave up early gains when the Institute for Supply Management manufacturing index rose to 56.9 from 54.4. A small decline had been anticipated. Separately, Construction Spending increased unexpectedly by 0.5%. The next few days may be especially volatile, with the mid-term election results coming out late Tuesday and the FOMC meeting of the Fed on Wednesday. No other data will be released today.

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