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Consumer prices rose a bit last month, but inflation still seems to be in check as the price cars, clothing, and hotels dropped.

The Consumer Price Index (CPI) rose 0.2 percent last month, according to the Labor Department, and that was mostly due to higher fuel prices.

With energy and food prices excluded, the core CPI stayed unchanged for the third consecutive month. Over the course of the past 12 months, core prices have risen by a mere 0.6 percent, the smallest annual rise since the index began in 1957.

This latest round of data would seem to support the Federal Reserve’s recent moves to boost the economy. Earlier this month, the Fed announced that it would purchase $600 billion in Treasury bonds in an effort to lower interest rates and spur spending.

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After a two-week selloff, Treasury bond are starting to stage a comeback today (Tuesday) as investors review the latest inflation data.

On Tuesday morning, the government reported that the Producer Price Index (PPI), a measure of prices at the wholesale level, rose by 0.4 percent last month. That’s the same level at which it increased in August and September, and below analysts’ expectations for 0.8 percent growth.

Investors will now turn to the Consumer Price Index (CPI), which comes out tomorrow morning (Wednesday). Analysts also expect that the CPI will reveal dangerously low levels of inflation.

Bond traders watch inflation data very closely, as expectations for how quickly prices rise over the long term could compete with the low yields on government bonds.

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A Congressional watchdog group said today that banks in the U.S. should undergo a new round of stress tests to ascertain whether or not they have sufficient capital to absorb losses stemming from investigations into their home foreclosure practices.

The Congressional Oversight Panel released a lengthy report detailing recent allegations that banks filed erroneous paperwork in foreclosure cases across the U.S.

The panel says that the nation’s financial system could hang in the balance if allegations of “robo-signing” are proven to be true.

“If documentation problems prove to be pervasive and, more importantly, throw into doubt the ownership of not only foreclosed properties but also pooled mortgages, the consequences could be severe,” the report said.

The main concern is that banks will be forced to re-purchase mortgage loans that had been bundled and sold in the $7.6 trillion market for Residential Mortgage Backed Securities, or RMBS. That, in turn, could mean severe losses for banks and destabilize the delicate financial system, said the report.