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Yields Advance As Inflation Readings Rise

Bond yields stabilized this week heading into the Presidents Day weekend, as the market recovered from the prior week's volatilty.  The week's economic indicators reinforced the notion that long-absent inflation is returning to the U.S. economy, with both the CPI and PPI measures arriving above expectations this week.  January saw softer than expected retail sales; however, the report wasn't taken at face value.  The harsh weather during the month received much of the blame for the releases' weakness.  Looking forward, the implementation of the recently enacted tax cuts is expected to provide support for further increase in consumer spending.  Yields on the short end of the curve rose by as much as 12 bps during the week, while longer dated Treasuries ended the week only slightly changed.

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