Pre-market indices are wallowing back in the red at this hour, minutes after the latest inflation report — July’s Producer Price Index (PPI) — was released, with results coming in either in-line or hotter than anticipated. This follows yesterday’s Consumer Price Index (CPI), which showed, for the most part, a continued slow decline in inflation metrics. Market participants at the time thought this spelled the end of Fed rate hikes, near-term, but eventually relinquished much of this exuberance.
This morning, headline PPI month over month came in at +0.3% — the hottest single-month print since November of last year — and a notable jump from the downwardly revised 0.0% registered for June. When we take away volatile food and energy prices, we come to the “core” read, which also reached +0.3% last month — an even bigger leap from the downwardly revised -0.1% for June. Ex-food, energy and trade, this figure comes in at +0.2%, in-line with expectations.
Just like with CPI numbers, however, the year-over-year reports are really where we see inflation on the economic map: +0.8% on year-over-year headline is the hottest monthly print since the +0.9% posted in May, and well above the previous month’s revision to +0.2%. If this looks to you like bad news, keep in mind these figures are relative: back in early 2022, these numbers were coming in hotter than +11%!
Core PPI year over year is now +2.4%, down from the +2.5% expected but in-line with the downwardly revised June read. This goes back to the lowest level since January 2021. Ex-food, energy and trade, we’re at +2.7% — likewise in-line month over month but above estimates for +2.5%. Services looks to have made up the lion’s share (+40%) of gains this month, with a notable rise in portfolio management costs.
These are the last big inflation reports of the week; after today’s open we will see Consumer Sentiment for August, which is expected to tick up to 72.0. While important in its own right, this metric does not carry the hefty of CPI/PPI numbers for a particular month. Thus, pre-market futures at this hour are -60 points on the Dow, -11 for the S&P 500 and -67 points on the Nasdaq. Perhaps a re-think, as we had yesterday in the opposite direction, will take hold: inflation has been provably tamed to a good extent. Whether it’s been inoculated by existing interest rate hikes or will need another booster shot from the Fed is still an open question.
Questions or comments about this article and/or author? Click here>>
Image: Bigstock
PPI for July Up on Headline, Flat on YOY Core
Pre-market indices are wallowing back in the red at this hour, minutes after the latest inflation report — July’s Producer Price Index (PPI) — was released, with results coming in either in-line or hotter than anticipated. This follows yesterday’s Consumer Price Index (CPI), which showed, for the most part, a continued slow decline in inflation metrics. Market participants at the time thought this spelled the end of Fed rate hikes, near-term, but eventually relinquished much of this exuberance.
This morning, headline PPI month over month came in at +0.3% — the hottest single-month print since November of last year — and a notable jump from the downwardly revised 0.0% registered for June. When we take away volatile food and energy prices, we come to the “core” read, which also reached +0.3% last month — an even bigger leap from the downwardly revised -0.1% for June. Ex-food, energy and trade, this figure comes in at +0.2%, in-line with expectations.
Just like with CPI numbers, however, the year-over-year reports are really where we see inflation on the economic map: +0.8% on year-over-year headline is the hottest monthly print since the +0.9% posted in May, and well above the previous month’s revision to +0.2%. If this looks to you like bad news, keep in mind these figures are relative: back in early 2022, these numbers were coming in hotter than +11%!
Core PPI year over year is now +2.4%, down from the +2.5% expected but in-line with the downwardly revised June read. This goes back to the lowest level since January 2021. Ex-food, energy and trade, we’re at +2.7% — likewise in-line month over month but above estimates for +2.5%. Services looks to have made up the lion’s share (+40%) of gains this month, with a notable rise in portfolio management costs.
These are the last big inflation reports of the week; after today’s open we will see Consumer Sentiment for August, which is expected to tick up to 72.0. While important in its own right, this metric does not carry the hefty of CPI/PPI numbers for a particular month. Thus, pre-market futures at this hour are -60 points on the Dow, -11 for the S&P 500 and -67 points on the Nasdaq. Perhaps a re-think, as we had yesterday in the opposite direction, will take hold: inflation has been provably tamed to a good extent. Whether it’s been inoculated by existing interest rate hikes or will need another booster shot from the Fed is still an open question.
Questions or comments about this article and/or author? Click here>>