This Thursday morning brings us more important economic data on wholesale goods prices and unemployment insurance. Bond yields are ticking up somewhat on this news, but pre-market equities — after a brief bout sinking triple-digits on the Dow — are back to the moderately low levels we had seen ahead of these releases.
The Dow is currently -58 points, with the S&P 500 -10 points and the Nasdaq -68. The small-cap Russell 2000 is -4 points at this hour. We’re here after a slight relief rally on the Nasdaq and S&P 500 yesterday, but at this moment we’re not seeing these gains continue. Bond yields are up a basis point (bps) on the 10-year, to +4.337%, and the 2-year up 2 bps to +4.011%.
PPI Wholesale Inflation Drops Unexpectedly
Good news on the economic release front: Producer Price Index (PPI) headlines are notably lower than expected for February, with headline month-over-month coming in at 0.0%, 30 bps lower than expected, and the lowest print since July of last year (it’s the third “unched” read in the past 12 months). Stripping out volatile food and energy costs, on the core PPI we sink to -0.1% from +0.3% estimated.
Year over year, PPI headline reached +3.2%, 10 bps below estimates, with year-over-year core PPI also 10 bps below expectations to +3.4%. Ex-food, energy and trade likewise came in at +0.2% from +0.3% expected month over month, +3.3% from +3.4% anticipated year over year.
Perhaps even more significant than these lower actuals across the board are the upward revisions to the previous month, which is increasing the distance of coming down on wholesale prices — and therefore a good sign for bringing down inflation. Headline month-over-month in January moved from +0.4% originally reported to +0.6% this morning, core month over month +0.5% from +0.3% previously, and year over year +3.7% from +3.5% initially posted, +3.8% from +3.4% on year-over-year core.
All this would be well and good, but the markets thus far remain unconvinced. The reason is clear: late February/March tariffs will no doubt change the direction of these PPI prices — and then lead directly to increases in retail prices in the Consumer Price Index (CPI). Market participants are already discounting this morning’s good news because they can see the inflationary road ahead.
Weekly Jobless Claims Remain Tame
Meanwhile, notable levels of government layoffs have not yet reached Weekly Jobless Claims data: last week’s Initial Jobless Claims moved down to a still-tame +220K from the +225K expected and the slight upward revision to +222% the previous week. Recall we struck +260K new claims one week back in October of last year.
Continuing Claims took another step backward to 1.870 million from 1.897 million the prior week. These longer-term jobless claims have been doing the cha-cha with the 1.9 million level, which is ultimately a positive for the overall labor market. Once these levels breach 2 million — which we haven’t seen since November 2021, when they were moving fast in the opposite direction — analysts will begin discussing the softening of the labor market.
Again, austerity measures of the new White House are bound to take effect in these figures. We’re not there yet, which is officially good news. But market analysts can see through to a time when these data points don’t sing quite as brightly. Pre-market futures are now off their lows for the morning.
Image: Bigstock
PPI Comes in Unchanged
This Thursday morning brings us more important economic data on wholesale goods prices and unemployment insurance. Bond yields are ticking up somewhat on this news, but pre-market equities — after a brief bout sinking triple-digits on the Dow — are back to the moderately low levels we had seen ahead of these releases.
The Dow is currently -58 points, with the S&P 500 -10 points and the Nasdaq -68. The small-cap Russell 2000 is -4 points at this hour. We’re here after a slight relief rally on the Nasdaq and S&P 500 yesterday, but at this moment we’re not seeing these gains continue. Bond yields are up a basis point (bps) on the 10-year, to +4.337%, and the 2-year up 2 bps to +4.011%.
PPI Wholesale Inflation Drops Unexpectedly
Good news on the economic release front: Producer Price Index (PPI) headlines are notably lower than expected for February, with headline month-over-month coming in at 0.0%, 30 bps lower than expected, and the lowest print since July of last year (it’s the third “unched” read in the past 12 months). Stripping out volatile food and energy costs, on the core PPI we sink to -0.1% from +0.3% estimated.
Year over year, PPI headline reached +3.2%, 10 bps below estimates, with year-over-year core PPI also 10 bps below expectations to +3.4%. Ex-food, energy and trade likewise came in at +0.2% from +0.3% expected month over month, +3.3% from +3.4% anticipated year over year.
Perhaps even more significant than these lower actuals across the board are the upward revisions to the previous month, which is increasing the distance of coming down on wholesale prices — and therefore a good sign for bringing down inflation. Headline month-over-month in January moved from +0.4% originally reported to +0.6% this morning, core month over month +0.5% from +0.3% previously, and year over year +3.7% from +3.5% initially posted, +3.8% from +3.4% on year-over-year core.
All this would be well and good, but the markets thus far remain unconvinced. The reason is clear: late February/March tariffs will no doubt change the direction of these PPI prices — and then lead directly to increases in retail prices in the Consumer Price Index (CPI). Market participants are already discounting this morning’s good news because they can see the inflationary road ahead.
Weekly Jobless Claims Remain Tame
Meanwhile, notable levels of government layoffs have not yet reached Weekly Jobless Claims data: last week’s Initial Jobless Claims moved down to a still-tame +220K from the +225K expected and the slight upward revision to +222% the previous week. Recall we struck +260K new claims one week back in October of last year.
Continuing Claims took another step backward to 1.870 million from 1.897 million the prior week. These longer-term jobless claims have been doing the cha-cha with the 1.9 million level, which is ultimately a positive for the overall labor market. Once these levels breach 2 million — which we haven’t seen since November 2021, when they were moving fast in the opposite direction — analysts will begin discussing the softening of the labor market.
Again, austerity measures of the new White House are bound to take effect in these figures. We’re not there yet, which is officially good news. But market analysts can see through to a time when these data points don’t sing quite as brightly. Pre-market futures are now off their lows for the morning.