The initial release of economic data in the early session caused the major indices to pop, but they have since pulled back. News of a rampant gunman at the Parliament building in Canada’s capital have a few concerned that terrorist activity might be on the rise. Although the news has been out for hours, financial media coverage has intensified these fears, putting investors on the fence. Boeing is currently weighing on the Dow Jones Industrial Average, as is Caterpillar which will report earnings before the open tomorrow. At the present, the major averages are trading off of session lows, though there were some relatively positive data in the form of monthly inflation and the weekly MBA index.

U.S. inflation was soft in September, though the headline figure was marginally higher than economists’ forecasts. The consumer price index (CPI) came in at +0.1% after falling by 0.2% in August, while economists expected no change. The core reading (excluding food and energy) also increased by 0.1% after no change in August, and was in-line with consensus expectations. The price of energy declined by 0.7% after a drop of 2.6% in August, and gasoline in particular declined by 1.0% in the month following a 4.1% decline in August – perhaps we have reached a bottom in the price of oil for the time being. Food prices increase 0.3% after posting a 0.2% gain in August. Several areas of increased inflation include medical care, alcoholic beverages, and personal care. However, airline fares and used vehicle prices were noted as decreasing in September. On a seasonally adjusted basis, the headline CPI was up by 1.7% in September, the same pace as August. At the moment though, inflation is considered soft and should not cause the Fed to increase the fed funds rate earlier than expected.

The Mortgage Bankers' Association’s (MBA) weekly reading of mortgage applications showed a substantial pop in the housing sector, most notably for those looking to refinance their mortgages. With mortgage rates falling so fast last week, the number of refinancing applications got a sharp lift, but not the applications for new home purchases. The refinancing index jumped by a whopping 23.0% in the week ended October 17^th following an 11.0% jump in the prior week, while the purchase index fell by 5.0% for a second straight weekly decline. Year-on-year, the purchase index is down about 9.0% - which should be higher in order to indicate steady economic growth from new homebuyers. Mortgage rates declined nearly 30 basis points in the last month, and were down 10 full basis points in the last week to an average 4.10% for conforming balances ($417,000 or less). This lack of movement in the purchase index indicates the need for a boost in traffic and lack of demand in the housing sector.