Inflation Worries in Check

Inflation appears to have lost whatever sting it had in the spring, according to the August Consumer Price Index figures released Thursday by the Bureau of Labor Statistics. Both the total CPI and the more closely-watched core CPI came in under expectations, according to a report from Bloomberg.com.

This means the Fed will likely stay the course with a modest 0.25% interest rate increase at its meeting next week. A higher core CPI number might have pushed the Fed to raise rates faster. What does this mean for investors? Bonds will continue to suffer from higher interest rates as will interest-rate sensitive industries such as housing and auto sales. However, if the Fed maintains the measured (their word) increases, the market should handle them without much disruption.