Reagan Capital's Skyler Weinand said the Federal Reserve needed more evidence to begin easing monetary policy, but today's inflation report gave the Fed “a little breathing room.” The core CPI annual rate for April was in line with expectations and cooled slightly, but it was still higher than the forecast of 2%, or 3.6%. Weinand pointed out that rising government deficits will make it harder for the Federal Reserve to reduce borrowing costs. He believes that interest rate hikes are more likely than interest rate cuts, and he expects 10-year US Treasury yields to rise back to 5%. Investors who hold fixed-income bonds for a short period of time will be rewarded, and investors should prefer variable interest rate bonds.