![](http://img43.imageshack.us/img43/7230/tradejune20092143242.jpg)
Trade Deficit Graphs Courtesy of Calculated Risk
The lede today is that the Federal Reserve Open Market Committee (FOMC) med and has issued its report.
Rates are staying where they are, but they are winding down their bond purchase program, and they seem to be seeing a light at the end of the recession tunnel.
You can read their full statement here.
Unsurprisingly, their upbeat attitude pushed the prices down, and hence the yields up, on 10 year US treasuries.
Me, I’m not the optimistic type, and with home prices declining 15.6% year over year, as foreclosures push down prices, and there is also tremendous amount of Shadow inventory out there, where banks are not listing houses on the MLS in order to support prices.
In any case, mortgage rates are on the rise again, which has depressed mortgage applications, particularly those for ReFis.
In addition, further indicators of what is going on in the real economy, specifically back to school sales and pay raises are both trending in the direction of awful.
On the trade deficit, there has been an increase in the US trade deficit, (see graphs) but this is not an artifact of increased demand for goods and services, but of rising oil prices, which, by the way, were up today.
We are also seeing a deflationary spiral in Japan, where wholesale prices fell by 8½% year over year in July.
Still, it appears that the Fed’s optimism has driven the dollar up today.