Rates faced upward pressure Friday as stronger than expected inflation data hurt mortgage-backed securities. The December Consumer Price Index (CPI) rose 0.1%, matching forecast, however the more closely-watched Core CPI, which excludes volatile food and energy components, jumped 0.3%, and was 1.8% higher than one year ago. If core inflation continues to rise, the Fed will be more likely to increase the pace of rate hikes. Separately, December Retail Sales rose 0.4%, in line with expectations, however the November results were revised higher. Stocks rallied on the news. No other key data will be released today. Financial markets will be closed on Monday in observance of Martin Luther King Jr. Day.