U.S. Consumer Price Index Met Expectations but was Light on the Core

The U.S. Consumer Price Index met expectations but was light on the Core, as energy prices buoyed the headline number.  According to the Labor Department, U.S. CPI increased 0.3% in September, in line with expectations, while the core rate rose 0.1%, which was slightly less than the 0.2% expected by economists

There were no revisions to prior months, where the headline increased 0.2% with the core up 0.3%. On an annual basis, the headline posted a 1.5% year over year increase versus 1.1% year over year for August. The core rate slipped to 2.2% year over year form 2.3% year over year. A 2.9% surge in the energy component paced the overall strength in September after a flat August print. Transportation was up 1.0%. Housing costs increased a firm 0.4%. Services costs rose 0.2% last month, while food/beverage prices were unchanged. Medical care edged up 0.2%. Tobacco was up 0.4%, as were commodities. Apparel prices dipped 0.7%.

U.S. yields reversed lower after the tame core CPI reading of 0.1%. The bond market had been bracing for an uptick in inflation thanks to firmer energy prices +2.9% and gasoline +5.8%, but it seems that pass-through was limited. The 2-year yield stalled ahead of 0.825% and slumped to 0.80%; the 5-year yield had jumped over 1.28% before reversing to 1.24%; the 10-year topped 1.775% then eased to the 1.75% pivot; the 30-year yield cleared 2.54% only to slump to 2.51%.

Canadian Manufacturing Shipments Grew in August

Data released in Canada showed that Canada manufacturing shipments grew 0.9% in August after the revised flat reading in June which was +0.1%. The increase was better than the 0.3% expected by economists. A pick-up in sales of food of 1.7%, along with primary metal which was up 3.6% and petroleum and coal products helped buoy shipments. Notably, transportation equipment sales fell 1.1%, but the decline was due to temporary factors which was an unusual one week shutdowns at some auto assembly plants.