NEW YORK (Reuters) - U.S. consumer spending rose slightly more than expected in February for the eighth straight month of gains as households tapped their savings, government data showed on Monday, while inflation accelerated at its fastest pace since June 2009.
KEY POINTS: * The Commerce Department said spending rose 0.7 percent after an upwardly revised 0.3 percent gain in January. * Economists polled by Reuters had expected spending, which accounts for about 70 percent of U.S. economic activity, to advance 0.6 percent in February after a previously reported 0.2 percent rise.
DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY, CRT CAPITAL, STAMFORD, CONNECTICUT:
"So, higher prices represent a tax in the sense incomes are not holding pace. Real income ex transfer were 0 percent. Thus Q1 GDP looks weaker than the consensus forecasts at this stage.
"The bond market, of course, is weaker as it faces supply and the curve is pretty steady through it all. Is it a focus on inflation implied in this report? We're not sure but suspect supply is its own 'reward.'"
FRANK LESH, A FUTURES ANALYST AND BROKER, FUTUREPATH TRADING LLC, CHICAGO:
"The consumption number was good and that is supportive for the market. There was some thought that consumer spending might not be holding up in the current environment and this says those worries may be unfounded -- at least for the time being."
MARKET REACTION: STOCKS: U.S. stock index futures hold slight gains. BONDS: U.S. Treasury debt prices widen their losses. FOREX: The dollar holds steady at higher levels versus the euro and yen.