Morning Report: Commodity prices increase

Vital Statistics:


  Last Change
S&P futures 3941 11.3
Oil (WTI) 59.95 0.44
10 year government bond yield   1.27%
30 year fixed rate mortgage   2.88%

Stocks are higher this morning on no real news. Bonds and MBS are down big.


Not sure what is going on in the bond market, but rates are up big this morning. Bitcoin is above 50k, and we are seeing commodity prices rise. The ice storm hit Texas and Oklahoma pretty hard, and that should impact oil supply and pricing. Lumber is also up big.


The upcoming week has some important data, with the producer price index, industrial production, housing starts, and existing home sales. The increase in lumber prices is an indication that this year will be big for housing starts.

We will also get the FOMC minutes on Wednesday.


Delinquencies fell from 7.65% at the end of the third quarter to 6.73% at the end of the fourth, according to the MBA. This is the biggest drop in delinquencies since the MBA started keeping records. DQs for government are about three times the rate of Fan / Fred.


Business activity grew “modestly” in New York State according to the Empire State Manufacturing Survey. The Fed tends to use terms like “modest” or “moderate” to characterize activity. Generally speaking, on a scale of 1 – 10, “modest” means about a 3. That said, the report did note some inflationary pressures: The prices paid index rose twelve points to 57.8, a level last reached
in 2011, pointing to sharp input price increases. The big question about all of this is whether the commodity price increases we are seeing are due to COVID-19 related supply chain issues (which are temporary) or due to fundamental changes in inflationary expectations and therefore permanent. This inflationary pressure will put bond yields on the defensive though.

11 Responses

  1. “…we are seeing commodity prices rise.”

    Does rising demand for lithium, cobalt, and other commodities no longer produced in volume in the western nations contribute? If so does this presage new supply line interruptions from China? I think China has taken a stake in Chile’s mining interests in order to control one of its western competitors. It has tentacles in Africa, as well.


  2. “Nothing about Marcuse was American, except his most important quality: he was a quack, which made him not just one of us, but a figure of respect and influence in this society.”



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