Morning Market Report

Domestic markets followed the rest of the world with significant losses yesterday. All three indices were down over 2% and the NASDAQ was down the most the index has lost in a single day since June. Meanwhile, two pieces of economic data just came out. Housing starts in July just came out and they were worse than expected.

Housing starts in the U.S. unexpectedly fell in July, pulled down by multifamily dwellings, while single-family starts which make up most of the industry rose to the highest level since October.

The 1 percent decline in starts to an annual rate of 581,000 was the first drop in three months and followed a 587,000 rate in June, the Commerce Department said today in Washington. Construction of single-family houses, which account for 75 percent of the industry, rose 1.7 percent to a 490,000 rate, today's report showed.

Meanwhile, Producer Price Index (PPI) just came out with their July numbers.

Wholesale prices in the U.S. fell more than forecast in July as energy costs receded, capping the biggest 12-month drop on record and showing inflation will not be an immediate concern for Federal Reserve policy makers.

The 0.9 percent decrease in prices paid to factories, farmers and other producers followed a 1.8 percent gain in June, the Labor Department said today in Washington. Excluding food and fuel, so-called core prices unexpectedly fell 0.1 percent.

Both these numbers are signs that so called "green shoots" aren't so "green". This comes on the heels of a poor consumer confidence number and maybe forming a pattern that the market may latch onto. So far, market futures are relatively unchanged following the news. Markets were all up between a half a percent and a full percent and that's where they are still at.

Bonds aren't responding either. They should be responding positively to the inflation news, measured by PPI, but so far all bonds have their rates trading just a bit higher. The Ten Year U.S. Treasury bond is now at just over 3.50%. Oil is also currently unchanged at $66.87 per barrel.

World markets were generally higher after a very bloody day on Monday. The Hang Seng in China was up .84% after falling more than 3% on Monday. The NIKKEI in Japan gained .16% and the Straits Time Index in Singapore was up .85%. Markets in Europe saw similar gains. The FTSE in London was up .41%, the DAX in Germany was up .23%, and the Spanish Index was up .11%.

Currencies are quiet around the world. The Dollar is down .01% against the Euro, it's down .44% against the British Pound, and against the Japanese Yen it's up .15%.

UPDATE:

Since I've been writing this the markets have begun to sell off slightly. They are now up about a quarter of a percent each. This, I imagine, is due to the release of worse than expected housing starts and PPI falling. Meanwhile, U.S. Treasury bonds haven't changed, yet.