Market commentary

Consumer prices for March came in pretty much in line with expectations with, headline inflation rising 0.5% and core prices, excluding food and energy, rising 0.1%, slightly less than expected. Almost all of the inflation in March’s report came from energy prices, up 3.5% month over month, and gasoline prices, up 5.6% month over month. If you are wondering what is causing the rally in the U.S. Treasury market, the reason quoted this morning is that the most likely outcome from the budget debate is a reduction in government spending. We will see if that reduction is sufficient to sustain these low yields. For today, enjoy the fact that mortgage pricing is .375% to .50% better from Thursday’s close.