The February Consumer Price Index (CPI) report showed overall inflation rose 0.44% last month, in line with estimates. The Year over Year numbers increased from 3.1% to 3.2%, hotter than expected.

But, the Core rate that strips out food and energy prices, increased by 0.36% hotter than expected, but the Core CPI decreased from 3.8% to 3.7%.

Overall, the inflation rate is just stubborn. Up a bit but core down a bit. This makes the FEDs think twice about June rate cuts.

The Bond Market has basically baked in this news and has a fairly flat response. We are still holding onto the last week’s rate improvement.