Treasury Yields Lose Steam

Investors breathed with relief about inflation after the release of the September Consumer Price Index -- but then some economists argued higher energy prices will impact growth.

MARKETSCOPE Treasury bonds rallied briefly on Friday after September Consumer Price Index data eased concerns about inflation, but later lost steam as some economists argued higher energy prices will impact growth.

The benchmark 10-year Treasury notes were yielding 4.48%, after having dipped briefly to 4.429% from an earlier 4.483%. The 30-year bond was yielding 4.71%, after having dipped to 4.659% from an earlier 4.708%. Yields rise when demand falls.

The core September Consumer Price Index, which excludes energy and food, rose only 0.1% -- the same as in August. Still, the overall CPI rose 1.2%, up from 0.5 % in August, as energy prices surged 12.0% due to supply shortages related to Hurricanes Katrina and Rita. The August CPI rose 0.5% as energy prices rose 5.0%.

U.S. Retail Sales rose 0.2% in September after falling 1.9% in August, which was revised from -2.1%. Real Earnings fell 1.2% in September after sliding 0.5% in August.

September Industrial Production plunged 1.3%, the largest decrease since 1.9% in January 1982. The University of Michigan's Consumer Sentiment Index fell to 75.4 in mid-October from 76.9 in September. U.S. Business Inventories rose 0.4% in August from a 0.4% decline in July, which was revised from -0.5%.

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