CPI shows ongoing inflation pressures
* The headline CPI gained 0.4% in February, above expectations for a 0.3% change and twice the gain (0.2%) in January. That pushed the year-over-year inflation rate UP to 2.4% from 2.1%.
* The core (ex-food and energy) CPI was up 0.2%, in line with the 0.2% gain forecast and slightly below the 0.3% gain a month earlier. Importantly, the year-over-year rate of core inflation came in at 2.7% again -- well above the Fed's 1% to 2% preferred range.
* Price gains were fairly widespread. Housing costs rose 0.4%. Services inflation rose 0.4%. Energy prices climbed 0.9%. Apparel was up 0.5%. Medical care climbed 0.5% and education and communication rose 0.3%.
The Fed keeps saying inflation will ease. The numbers don't show it. Can the Fed really afford to breathe a sigh of relief in the face of data like this? I doubt it. Treasuries are getting hit on this news, with the Long Bond down 13/32 in recent trading and 10-year yields up about 1.7 basis points.
The dollar came into this data trading very weak against all currencies. It's bouncing a bit on the news. But if it can't hold that bid, key currencies like the euro could stage significant technical breakouts. Interesting times, to say the least.