Rates Up Despite Tame Core Inflation of +0.8% YOY and Retail Sales +0.6% (CHARTS)

Rates are higher to end the week despite tame inflation readings and slightly better retail sales. The US Consumer Price Index, which measures inflation at the consumer level of the economy, was nearly flat at 0.1% in September and 1.1% year-over-year through September. Excluding volatile oil and food costs from the readings, “Core” CPI for September was unchanged and increased 0.8% year-over-year through September. Also released today was September Retail Sales showing a 0.6% gain over August and a 7.3% gain over September 2009.

Rates are up because the mortgage bonds that they’re tied to have sold off—and when bond prices drop in a selloff, rates rise. Normally the tame inflation readings from yesterday and today would cause mortgage bonds to rally, but they’ve already had a multi-week rally on quantitative easing rumors and this week’s weak Treasury auctions gave pause to mortgage and all other bond traders, so they sold and took profits as the week wore on. See retail sales charts below. You can also scroll to our data section to auto-create charts and download key data, and keep up with releases using our Economic Calendar.