Consumer Inflation Comes in as Expected

The Bureau of Labor Statistics announced this morning that its Consumer Price Index rose by 0.4% in December as analysts expected. Year-over-year, headline CPI grew 1.4% and that was slightly higher than the 1.3% that was forecast. November’s twelve-month rate was 1.2%. Without food and energy, core CPI rose 0.1% as expected and that left the year-over-year rate at an unchanged 1.6%. Inflation-adjusted Real Average Hourly Earnings year-over-year grew 3.7% last month and that was up from November’s 3.2%. Real Average Weekly Earnings are up 4.9% year-over-year and that also beat November’s twelve-month rate of 4.7%. Earlier today, the Mortgage Bankers Association reported that, for the week ending January 8th, new Mortgage Applications grew at a frenzied 16.7% following a 1.7% increase the week before. The Treasury will be selling $24B Thirty-Year bonds later today.

Treasury prices seem little affected by the news and prices are little changed from yesterday afternoon. The Ten-Year is trading around 1.13% with the Long Bond at 1.86%. The Two-Year is sitting pretty steady at 14 basis points. Crude oil is up slightly at $53.48 as is gold at $1,857. Domestic equity indices are slightly in the red as markets wait to open. Also this morning, the House will vote on Articles of Impeachment against President Trump.