Import Prices Rise Less-than-expected

- The Import Price Index for August rose 1.3% versus estimates of a 1.4% increase and a downwardly revised .8% gain in July.

BOTTOM LINE: Prices of goods imported into the US rose in August by the most in five months as crude oil costs climbed even before Hurricane Katrina struck the Gulf Coast, Bloomberg said. The price of crude hit a record the day after Katrina struck. The cost of most other imported industrial goods and consumer products either declined or were mostly unchanged. Excluding petroleum, prices were up 1.8% year-over-year, the smallest increase since March 2004. As well, excluding energy, import prices have now fallen over the last four months. Moreover, the price of goods from China has declined 1.3% over the last 12 months. This is likely the reason the 10-year T-note yield is falling again today to 4.10%. Looking past the temporary effects of Katrina, bond investors see decelerating inflation readings once again.