Inflation’s Jump in April

The Bureau of Labor Statistics reported this morning that its Consumer Price Index rose 0.8% last month and that was considerably higher than the 0.2% bump that analysts expected. Year-over-year, along with the effects of a changing base, that helped push the twelve-month pace to 4.2% in the face of a 3.6% expectation. Without food and energy, core CPI rose 0.9% versus an expected 0.3%. Year-over-year, the core year-over-year pace rose to 3% from 1.6% against an expectation of 2.3%. Adjusted for inflation, Real Average Hourly earnings fell 3.7% year-over-year while Real Average Weekly Earnings fell 1.4%. Earlier this morning, the Mortgage Bankers Association announced that for the week ending May 7th, Mortgage Applications rose 2.1% after the prior week’s dip of 0.9%. The Average 30-year fixed mortgage rate was down slightly to 3.11%.

The Treasury market hasn’t reacted much to this morning’s numbers although bond prices are slightly lower. The Long Bond is yielding around 2.35% with the Ten-Year bringing 1.65%. The Two-Year is yielding around 17 basis points. Crude oil is up about a dollar to $66.28 while gold is up slightly to $1,840. The Treasury will be selling $41B Ten-Year notes this afternoon. Equity futures are glowing red.