Market commentary

In the morning’s early releases, Core CPI came in at a year-over-year pace of 0.8%, the lowest level since 1961. Advanced retail sales, excluding autos, in August were revised higher to up 1.0% on strong back-to-school shopping but September’s figure only increased at a 0.4% pace.

Fed Chairman Bernanke was the center of attention for the markets today with a speech regarding monetary policy objectives. The Fed is clearly worried about a deflationary environment and Bernanke’s comments discussed the tools the Fed has at its disposal as well as the problems and unintended consequences of using those tools.

U.S. stock markets opened strong, buoyed by the data and Bernanke’s comments, while the treasury market retreated. The last piece of data for the day reversed the stock markets, as a measure of consumer confidence was reported lower than forecasted. While the stock markets reversed course, heading lower on the day, treasuries remain lower, with the yield on the 10 year note now standing at 2.53%. Mortgage prices are flat from the close on Thursday.