From our colleagues at our sister company, Argent Trust:
Announced this morning, the Consumer Price Index increased 0.1% in March, slightly lower than expected and lower than the previous month. It grew 5.0% on an annual basis. Monthly prices for Tobacco and Smoking products, up 0.8%, were relatively strong, while monthly prices for Utility gas service (natural gas), down -7.1%, and Gasoline, down -4.6%, were weak. The core rate, which excludes prices for food and energy, increased 0.4% in March, as expected and slightly less than the previous month. It increased 5.6% on an annual basis, a slightly higher annual level than the previous month.
Overall, inflation measures came in as expected, with lower monthly increases than the previous period. The results reaffirm the overall move lower we have seen in inflation since last summer. However, the annual figure for the core rate moved up to 5.6%, in the wrong direction and still more than double the Fed’s 2% target. Given these results, the Fed likely wants to continue keeping policy tight until inflationary measures show more progress toward their goal. The company commentary and earnings revisions in upcoming quarterly results will be a key component for markets in the coming weeks.
In all, the 10-year US treasury yield is lower following the report and equity futures are higher as we head into the market open.
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