Consumer prices rose 0.4% in April, bringing the year over year rate of price increases to 3.2%. The majority of price increases are coming from energy related prices as the core index rose only 0.2%. Gasoline costs rose 3.3%, the largest increase of any of the Consumer Price Index subcomponents. The bond market does not seem to be concerned at this point because so much of the inflation is coming from higher oil prices.
Thursday’s retail sales data reflected consumers were pulling back on spending, however, according to the Thomson Reuters/University of Michigan survey released this morning, the consumer sentiment index rose to 72.4, a three-month high, from reading of 69.8 in April.
After Thursday’s sell off in bonds, the see-saw market action continues as bond yields are falling this morning and U.S. stock markets are in retreat. Mortgage prices are slightly improved.
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