Fannie Mae and Freddie Mac have made considerable progress towards
achieving financial stability, but more progress needs
to be made, according to the Office of Federal Housing Enterprise
Oversight’s annual report to Congress released on Tuesday.
A report from Wells Fargo and the National Association of Home
Builders suggests the housing market was little changed from
March to April, with their headline index coming in once again at a
reading of 20, in line with the consensus.
The Federal Reserve offered no explanation for the quarter-point cut
in the discount rate on the day of the near-collapse of Bear Stearns in
minutes of the March 16 meeting.
The U.S. Labor Department’s headline measure of producer price
inflation grew at 1.1% in March, up from February’s 0.3% gain
and higher than forecasts for a 0.6% gain. The core measure of producer
price inflation, which excludes cost increases in food and energy, edged
up by 0.2%, in line with economists’ calls for a 0.2% increase in the
month.
The United States will hold most of the economic spotlight on Tuesday
morning with the release of March’s producer price index along with the
Empire Fed’s manufacturing and the NAHB’s housing price indexes, both for
April. Markets will also hear some comments from the U.S. Treasury while
the Bank of Canada is scheduled to conducts some bond operations.
Federal Reserve Governor Kevin Warsh (voter) said
rate cuts and liquidity injections are working to partially offset the
impact of the current market turmoil, but cautioned that there are limits
to what the Fed’s monetary policy can accomplish and that a full recovery
is going to take some time.
In spite of it all, the “it” being the stunning speed with which
Bear Stearns hit rock bottom last month and the midnight
ride rescue of the investment bank by J.P. Morgan Chase, Bear Stearns is
still reporting a profitable first quarter.