ECONOMIC
INDICATORS |
Traditional
Bond Market
Movement |
Rationale |
| Consumer Price Index (CPI) up |
Down |
Inflationary, conceivably reducing the future value of fixed rate securities. |
| Gross National Product (GNP) down |
Up |
Economic growth slows and the Fed loosens money by allowing rates to come down |
| Housing Starts up |
Down |
With a rise in housing demand, the Fed attempts to tighten by allowing rates to rise. |
| Industrial Production down |
Up |
The economy is slowing and the Fed allows interest rates to drop, stimulating growth. |
| Money Supply Figures up |
Down |
Generates fears the Fed may tighten monetary growth by allowing short-term interest rates to rise. |
| Personal Income up |
Down |
The higher one's income, the more one consumes, causing more demand and higher prices. |
| Retail Sales up |
Down |
Indicates the economy is expanding, causing inflationary pressure. |
| Unemployment up |
Up |
Lack of expansion; the Fed is likely to loosen credit policy to allow rates to come down. |
| Producer Price Index up |
Down |
Higher demand for goods and prices; the Fed is less accommodating in allowing rates to go lower. |
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