The Fed welcomed some incrementally encouraging news on the inflation front Friday, when US producer prices came in mixed. “Could’ve been worse,” as they say.
The headline final demand gauge was flat MoM against expectations for a marginal 0.1% uptick. Not to nitpick, but I’d gently suggest “unchanged” isn’t accurate here. The unrounded print was 0.04824%. That’s not “unchanged.” Unchanged (no scare quotes) was May’s 0.0014% reading. Out of four “unchanged” MoM readings in 2024, September’s was the highest. By a lot.
Anyway, when measured on a 12-month basis, the PPI index rose 1.8%, the slowest since February, but warmer than the 1.6% consensus.
Excluding food and energy, the increase was 0.2%, as expected. The YoY print there was 2.8% against 2.6% seen.
Coming as it did on the heels of Thursday’s warmer-than-expected CPI release, policymakers will probably take some small measure of solace in the PPI figures. And Fed officials will eye the preliminary read on University of Michigan inflation expectations (also published on Friday) closely.
That said, the cat’s out of the bag on a possible November pause. The word “skip” featured pretty heavily in Friday’s deluge of morning market commentary. Raphael Bostic opened the door, and a mixed PPI report ain’t gonna close it. Not on its own.
But this is still a Fed that wants to cut in November. There’s no doubt about that. It’s just a matter of whether the data between now and November 7 is sufficiently soft for Jerome Powell to be comfortable cajoling what could be several possible dissenters.
what is the message in our obsession with how the FED will react and how traders will react to the FED … rather than objectively discussing the data and the economy that supposedly created the data? – not throwing water at H – we’re all in same boat imho.
Yes, we have been getting a little silly….
When do we shift to thinking about the impact of Trump’s second term on the economy, markets and earnings ? And most importantly volatilty? t looks increasingly likely he’ll be back.