Source: US Dept. of Treasury End of Day
• Yields retreated last week with the two-year Treasury note falling by six basis points to 5.01% while the five-year note dropped by eleven basis points to 4.65%.
• Energy and shelter costs drove an uptick in inflation as CPI advanced slightly more than expected in September at 0.4% versus an expected 0.3% while core CPI was in line with expectations advancing by 0.3%.
• Economists do not feel that the latest inflation prints pose a threat to the disinflationary trend in place as shelter costs are bound to slow with new leases continuing to fall and as a large supply of multi-family residences come to market.
• The FOMC is likely to shrug off last week’s inflation readings as the underlying trend remains intact, and as multiple Fed members mentioned last week that the recent rise in yields will further tighten credit conditions mitigating the case for another rate hike.
