Muted Inflation Report

The Bureau of Labor Statistics released its January report on consumer inflation this morning and its content still portrays subdued degrees of price level changes. The Consumer Price Index rose 0.3% as expected last month while December’s rise of 0.4% was revised to just 0.2%. Year-over-year, headline CPI remained at 1.4% despite analysts expectations that it would show a slight increase. Without food and energy, core CPI was unchanged for the month disappointing the experts looking for a 0.2% rise. December’s rise of 0.1% was revised to 0.0%. Year-over-year, the core rate fell to 1.4% from 1.6%.

These lower-than-expected levels of inflation helped Real Average Weekly Earnings notch a year-over-year rise of 6.1% last month while December’s twelve-month rate of 4.9% was revised to 5.3%. Real Average Hourly Earnings rose 4% in January on a year-over-year basis. The spike in inflation that so many seem to fear is taking its time getting here. The coming months may see some significant statistical changes as the severe lockdown months of last year drop off of the year-over-year calculations.

Earlier this morning, the Mortgage Bankers Association reported that for the week ending February 5th, total Mortgage Applications fell by 4.1%.

Treasury prices are up in early trading with the Two-Year at 11 basis points, the Ten-Year at 1.15%, and the Long Bond yielding 1.94%. Crude oil is up slightly to $58.64 with gold rallying $12, so far, to $1,850. Equities may open substantially higher. The Treasury is selling $41B Ten-Year notes today.