Inflation Falls Short


There was little major news this week and not much reaction to the economic data. Investors shifted some assets from bonds to stocks, and mortgage rates ended the week a bit higher. 

Perhaps the most widely followed inflation report is the Consumer Price Index (CPI), which looks at the price change for a basket of goods and services. Investors generally prefer to look at the core reading, which excludes the volatile food and energy components, to get a feel for the longer term trend.

In April, Core CPI increased 0.1% from March, below the consensus for an increase of 0.2%. Core CPI was 2.1% higher than one year ago, the same annual rate of increase as last month. 

While it is rarely a market moving report, Fed officials pay close attention to the monthly JOLTS data to help determine the strength of the labor market. JOLTS measures job openings and labor turnover rates. In March, job openings jumped to 6.55 million, which was a record high level. An increase in job openings is viewed as a sign of strength in the labor market, since it indicates that companies are interested in hiring but the pool of unemployed workers is not large. 

Looking ahead, Retail Sales will be released on Tuesday, and it will be the biggest report of the week. Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator. Industrial Production, another important indicator of economic activity, and Housing Starts, will come out on Wednesday. 

Weekly Change:

Mortgage Rates rose 0.02

DOW rose 600

NASDAQ rose 200

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