Markets struggled to find direction ahead of several inflation statistics. The PPI is released today at 8:30. Producer Prices are expected to increase at a greater month over month and year over year pace. The question is how much and what will be the market’s reaction.
JP Morgan wrote the market is poised to move 1% in either direction if the data differs from consensus.
According to the WSJ, more than half of small business owners plan to raise prices in the next 12 months. Sixty-four percent of those surveyed said they had increased prices in the 12 months prior. The decade before the pandemic, small businesses “rarely” adjusted prices.
As noted several times, inflation is only reverting to its mean…a mean of 3.3% since WWII. The decade from 2010-2020 was an anomaly just as the decade from 1972-1982, the extremes of past 80 years.
The narrative is rising that a 2% inflation rate is not achievable unless the economy experiences great pain. Many are suggesting 3% should be the new target.
Last night the foreign market were down. London was up 0.06%, Paris down 0.04% and Frankfurt down 0.15%. China was down 0.07%, Japan up 0.46% and Hang Seng down 0.22%.
Futures are flat ahead of the PPI. The 10-year is up 1/32 to yield 4.48%.
Kent Engelke
Chief Economic Strategist Managing Director
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