Following Tuesday's higher-than-expected U.S. consumer price index for January, Friday's producer price index was another sign that inflation may not be slowing toward the Federal Reserve's 2% target as quickly as hoped.
The annual rate of PPI in the United States in January was 0.9%, higher than the expected 0.60% and the previous value was 1.00%. The monthly rate of PPI in the United States in January was 0.3%, the highest since August last year, higher than the expected 0.10% and the previous value was -0.10%.
After the data was released, swap contracts showed that traders expected the Fed to reduce the possibility of rate cuts in May and June, and reduce the rate cuts to about 85 basis points for the whole year of 2024. The yields of U.S. 2-year and 5-year Treasury bonds hit their highest point of the year. The U.S. dollar index rose 20 points in the short term. Spot gold plunged during the session, falling below $2,000 per ounce.
The most active gold futures contract on COMEX traded 3,040 lots in one minute from 21:30 to 21:31 Beijing time on February 16, with a total value of US$612 million.
Institutional analysis pointed out that the PPI increase in the United States in January exceeded expectations, highlighting the stickiness of inflation. Data showed that the PPI rose 0.3% from December last year and 0.9% year-on-year, both exceeding expectations. The so-called core PPI, which excludes the more volatile food and energy categories, rose 0.5% from the previous month and 2% from the same period last year, both exceeding expectations.
Market participants closely watch the PPI data as a measure of wholesale price pressures. It is considered a leading indicator because producers typically pass on higher prices to their customers. The Federal Reserve, which is still debating the trajectory of interest rate cuts, considers the PPI data particularly important.
Analyst Cameron Crise said that the surge in inflation in the United States in January seems to be real, as all indicators of PPI today exceeded expectations, especially the core indicators. Although the previous data was slightly revised down, this looks like a hot report, which should push up expectations for core PCE. This seems to indicate that yields will return to their post-CPI highs, and perhaps provide a catalyst for U.S. stocks, prompting a "usual" correction in stocks before the U.S. election. Weak housing starts may serve as a rebuttal, but from a macro perspective, this is undoubtedly correct.
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The article is forwarded from: Jinshi Data