Producer prices rose more than forecasted in April after an unexpected downward revision into negative territory of March’s data. Compared to a year ago, the PPI rose by the most since April 2023.
PPI for final demand increased 0.5% from a month earlier following a downwardly revised 0.1% drop in March. The extent of the swing, specifically into negative territory, is regarded as an extreme event.
Some are overtly questioning the validity and the collection of the data given the large revision. FRB Chairman Powell has remarked the data might understate inflation and could be corrupted by the political process.
Speaking of the Fed Chairman, Powell spoke yesterday and reiterated the Central Bank will likely be on hold for now “citing a lack if inflation progress.”
Today the CPI is released. Will the data confirm the PPI? The correlation between the two has waned over the years.
The response to the PPI was lackluster believing the underlying inflation moderated in April for the first time in six months based upon today’s forecasted CPI data.
Compared with April 2023, the core CPI is projected to rise 3.6%. While that annual increase would be the smallest in three years, it is still considerably above the 2% speed limit thus preventing any intermediate rate cuts.
Last night the foreign markets were mixed. London was up 0.29%, Paris down 0.22% and Frankfurt up 0.42%. China was down 0.82%, Japan up 0.08% and Hang Seng down 0.22%.
Futures are flat ahead of the CPI. The 10-year is up 8/32 to yield 4.41%.
CPI AT 8:30
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
