Wednesday, June 15, 2016

Producer Pricing Index (PPI) results for May were released this morning, and again we’re seeing better numbers than had been expected: while the headline number reached 0.4 percent (0.3 was the consensus estimate), when you strip out food and energy (which can fluctuate wildly month to month) the result was 0.3 percent; ex-food and energy expectations had been for just 0.1 percent.

Month over month we’re down 0.1 percent, but year over year PPI, ex-food and energy, is up 1.2 percent. This is 0.3 percent hotter than our last read, and marks the second straight day of better-than-expected domestic economic data.

Empire State Manufacturing results were also released before the bell today, and swung to +6.01 — far ahead of the -4.0 we had expected. This is the June number; for May this figure was -9.02, so we see these figures are quite volatile month over month. For instance, the April number was even closer to +10 than this month’s figure.

Futures for the Dow, Nasdaq and S&P 500 are all up modestly ahead of Wednesday’s open, as we saw the yen, euro and pound all gain while we were sleeping. So for the first time this week, the market looks like it’s in a buying mood.

However, much of today’s activity is likely to be muted ahead of Fed Chair Janet Yellen’s speech this afternoon following the June FOMC meeting. While literally no one expects a June rate hike, much attention will be paid to the language Yellen uses in describing the state of the economy. Many analysts have already taken a July rate hike off the table — which would make it more difficult to raise rates twice in 2016, which is something earlier predicted by one of the regional Fed presidents.

Mark Vickery
Senior Editor