Rates Up After Sept Business Inflation Higher Than Expected At +.4%. (Data downloads, charts)

The US Producer Price Index, which measures inflation at the business and manufacturing levels of the economy, was .4% in September and 4% year-over-year through September. Excluding volatile oil and food costs from the readings, “Core” PPI was 0.1% in September and 1.6% year-over-year through September. The monthly number of .4% was twice expectations, causing mortgage bonds to sell off this morning and push rates higher. But the selloff is also partly because of the $13b in 30yr Treasuries being auctioned today. Results of that auction due in one hour, and previous auctions this week have had a negative impact on mortgage bonds, pushing rates up. Tomorrow’s consumer inflation number will give us another key inflation signal to follow today’s.

Inflation has been steadily low for the past year which you can see by clicking the Monthly ‘All’ and ‘Core’ PPI reports in our Data section (on the lower right side of the site) or going to our full data page. The Fed and markets all generally agree there’s no cause for major inflation, but it’s still closely watched and bonds still sell of on hotter readings like today’s, and this causes rates to rise.