A key US inflation gauge cooled in April, while retail sales rose last than expected last month, painting a muddy picture of the economy as the second quarter started.

Core consumer prices, a figure that excludes food and energy, rose at a year-over-year clip of 1.9 per cent last month, coming in below the previous month’s reading of 2 per cent, the labour department said on Friday. Wall Street expected the gauge to have held steady. The headline CPI reading was also light, falling to 2.2 per cent from 2.4 per cent, and missing estimates of 2.3 per cent.

Meanwhile, a separate report from the commerce department showed that retail sales rose 0.4 per cent month-on-month in April, missing the 0.6 per cent rise that was forecast. Notably, however, the March figure was revised higher to a gain of 0.1 per cent, from a fall of 0.2 per cent.

The so-called “control group”, which is seen as less volatile and is more closely watched by economists, experienced a 0.2 per cent rise in April, also shy of the 0.4 per cent that was expected. However, the March reading was revised up to a rise of 0.7 per cent from 0.5 per cent.

Investors bid up US Treasuries after the release on Friday. The 10-year yield was recently down 0.024 percentage point (2.4 basis points) to 2.363 per cent. Meanwhile, the policy-sensitive two-year yield was down 2 bps at 1.315 per cent.

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