Today's PPI inflation figures surprised investors and triggered some moves on the markets. The Producer Price Index for final demand in the US rose 0.3% MoM in November, the same as an upwardly revised 0.3% increase in October and above analysts estimates of 0.2%. Cost of services went up 0.4%, led by securities brokerage, dealing, investment advice, and related services, which jumped 11.3%. Cost of goods edged up 0.1%, led by a 38.1% surge in prices for fresh and dry vegetables. On YoY basis, producer prices were up 7.4%, the smallest increase since May last year, but higher than expectations of 7.2%.
The Core PPI rose by 0.4% Mom in November, after an upwardly revised 0.1% increase in October and above market expectations of a 0.2% rise. Year-on-year, core producer prices rose by 6.2%, after an upwardly revised 6.8% rise and above market forecasts of a 5.9% increase.
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Today's reading points out that inflation still remains elevated, which supports a more hawkish approach from FED next week. Source: Bloomberg via ZeroHedge
PPI inflation is falling, but at a much slower pace than expected. This shows that there is rather little chance for the CPI to drop below 7%. At the same time, Powell may maintain a more hawkish stance unless the CPI falls significantly.
US500 fell after publication of today’s PPIdata, pulling away from major resistance at 4000 pts Nearest support to watch lies at 3800 pts. Source: xStation5