Consumer Inflation Offers No Surprises

This morning’s closely watched report from the Bureau of Labor Statistics on February’s Consumer Price Index came in about as expected. Headline CPI rose by the estimated 0.4% last month with most of the rise coming from energy prices. Year-over-year, CPI rose to 1.7% from 1.4% and that was what analysts had predicted. Without food and energy, core CPI rose by 0.2% for the month versus an estimate of 0.1% while year-over-year, January’s 1.4% pace slowed to 1.3%. Inflation-adjusted Real Average Hourly Earnings grew 3.4% last month on a year-over-year basis and that was down slightly from the prior month’s 3.9%. Real Average Weekly Earnings had a 4.1% year-over-year growth rate and that was down from 5.7% in January.

Prior to the report, the Mortgage Bankers Association reported that for the week ending March 5th, Mortgage Applications fell 1.3%. Applications for purchase rose 7.2% as refis fell 5.0%. The average 30-year fixed rate was 3.26%.

Treasury prices were already slipping a little bit prior to this morning’s news and appear little affected since. The Two-Year’s yield has crept up slightly to 17 basis points with the Ten-Year at 1.55% and the Long Bond at 2.27%. This afternoon, the Treasury will be selling $38B Ten-Year notes and that auction will be closely watched in order to gauge investor demand. Crude oil is off a little bit to $64.64 and gold is little changed at $1,716. DJIA futures are flashing triple-digit green.