January 18, 2017
Core inflation is still moderate but the year-on-year rate for the total CPI, now at 2.1 percent, is on the climb due to increases underway in energy prices. But manufacturing production isn't on much of a climb at all after a soft 0.2 percent showing in December. Other news included a Beige Book that highlights optimism on the outlook, not ongoing economic strength, and a speech from Janet Yellen who avoided questions of fiscal stimulus and repeated expectations for several rate hikes this year.
Inflation pressures are often a negative for the bond market where demand fell as the 10-year yield rose 9 basis points to 2.42 percent. News late in the day showed a big drop in Chinese holdings of U.S. Treasuries. The pound and the euro both retreated following yesterday's Brexit-related surge, helping the dollar index post a 0.9 percent gain to 101.21. The Dow had another flat day, down 0.1 percent to 19,804.