Wednesday, May 13th, 2026

Pre-market futures are off their early-morning highs at this hour, but early-bird investors are doing their best to parse the latest inflation report out this morning. The Dow is -175 points, the S&P 500 is +3 points, the Nasdaq is +109 points, while the small-cap Russell 2000 is -2 points currently.
 

PPI Wholesale Inflation Jumps to Highest Levels in 4 Years

A day following the Consumer Price Index (CPI) for April, which is the retail print on inflation, this morning we get the Producer Price Index (PPI), the wholesale side of the equation. It’s fair to say these numbers have spiked — month over month, year over year and compared to expectations.

Headline PPI month over month pole-vaulted to +1.4%, nearly 3x the +0.5% anticipated, and double the upwardly revised +0.7% for March. This is the highest level we’ve seen since March 2022 — the same month Russia invaded Ukraine and the Fed finally began raising interest rates — which, at +1.7%, was an all-time high. Strip out volatile food and energy prices, the core read also triples expectations: +1.0%, from +0.3% forecast and +0.2% reported for March.

For the year-over-year numbers, we expected a jump of about 80 or 90 basis points (bps), but PPI year over year far outpaced those estimates: +6.0%. It’s 170 bps above the upwardly revised +4.3% from March, which itself was the first “4-handle” in more than three years. We were last at these inflation levels on the wholesale side in December of 2022, when figures were cascading downward of that summer’s peak. Core PPI year over year reached +5.2%, 120 bps above the upwardly revised +4.0% for March.

Even when we parse this data further — subtracting food, energy and trade from headline PPI — we’re still +0.6% month over month and +4.4% year over year. These figures are far afield from optimal inflation rates suggested by the Jerome Powell-led Fed. Incoming Fed Chair Kevin Warsh, who will preside over his first FOMC meeting a month from now, will have a difficult time convincing voting Fed members to cut rates in such an environment.

Most troubling, perhaps, is that we appear to still be on the visible side of the iceberg. The Strait of Hormuz has “only” been effectively closed for two months or so, and oil reserve drawdowns in most advanced nations have so far kept this condition from acutely affecting the global economy. But another two months of this, once the drawdowns have become more exhausted" Where would we be then"
 

Bond Market Reacts to PPI Inflation

Almost immediately, the 2-year bond yield jumped to +4.0%, and the 10-year climbed closer to +4.5%. This followed yesterday’s close on the 10-year at highs last seen in June of last year. Similarly with the 2-year: even though we have touched +4% momentarily in the last couple months or so, we last swam in these waters meaningfully last summer.

These are clearly higher levels than the current Fed funds rate of 3.50-3.75%. Assuming these oil supply conditions are tamed very quickly for a meaningful length of time (fingers crossed for President Trump’s meeting today in China with President Xi Jenpeng), we might consider holding these levels to be the most responsible course of direction. Currently, expectations are for the next Fed move to be a rate HIKE, not a cut (+32% chance in December, +59% chance in April of next year).
 

Earnings Results at a Glance: BABA, CSCO & More

Ahead of today’s open, we saw two Chinese companies — Alibaba BABA and Tencent TCEHY — miss earnings expectations by massively different amounts: -92% for BABA, -$0.01 for Tencent. Closer to home, Birkenstock BIRK posted a big earnings miss: -15.7%.

After today’s close, Cisco Systems CSCO becomes the next big tech name to put out quarterly results. Expectations are for +8.3% earnings growth from a year ago on +10% higher revenues. Cisco always beats earnings estimates, but never by a gigantic amount.

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Key Earnings Reports For May 13, 2026