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Daily Market Update 9/13/13

Rates moved lower Friday following the release of weaker than expected economic data.  August Retail Sales rose 0.2%, below the consensus forecast of 0.5%.  The Producer Price Index (PPI) jumped 0.3%, above expectations, but the “Core” PPI, which excludes volatile food and energy components, was unchanged.  An increase of 0.1% had been expected.  Consumer Sentiment fell to 76.8, far below expectations.  The big news next week will be the two-day Fed meeting beginning on Tuesday.  No rate changes are expected, but investors will be watching closely for clues about the timing of a planned tapering of bond purchases by the Fed, known as “quantitative easing”.  Most economists believe the Fed will begin scaling back its volume of purchases beginning this month, but recent data suggests that economic growth may be slowing.  Expect rates to be unusually volatile in the coming days.

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