Source: Gelonghui
Today, the US Bureau of Labor Statistics announced the US PPI and core PPI for April. The overall PPI data recorded the biggest increase in 12 months, and the core PPI both exceeded market expectations month-on-month and year-over-year.
This indicates that inflationary pressure in the US will take some time to ease.
According to the data, the US PPI for April was 2.2% year-on-year, with an forecast of 2.2%, the previous value of 2.1%, the biggest increase since April 2023; the US PPI for April was 0.5% month-on-month, expected 0.3%, and the March value was lowered to -0.1%.
The US core PPI for April was 2.4% year-on-year, expected 2.3%, and the previous value was 2.4%; the US core PPI for April was 0.5% month-on-month, expected 0.2%, and the previous value was 0.2%.
After the PPI data was released, traders reduced their bets on the Federal Reserve's interest rate cut in September.
US 10-year Treasury yields rose to new highs since May 3, and 2-year yields rose to new highs since May 2.
The US dollar index DXY rose 26 points in the short term, then fell below the 105 mark for a while.
The rise in service prices is the main reason
Specifically, the PPI increase in April was mainly due to rising service prices.
Service prices rose 0.6%, the biggest increase since rising 0.8% in July 2023, accounting for nearly three-quarters of the overall increase in PPI.
Among them, the price of trade services increased by 0.8%, and the price of transportation and warehousing services decreased by 0.6%.
Commodity prices rose 0.4%, mainly contributed by a 2% increase in energy prices. Food prices fell 0.7%, gasoline prices rose 5.4%, and fresh and dried vegetables fell 18.7%.
Regarding the April PPI data, Bespoke Investment Group commented, “The April PPI data was higher than expected. This is bad news. However, on a year-on-year basis, the data is closer to expectations, and the March data was lowered to -0.1% on both the overall and core basis.”
Markets await tomorrow's CPI
Tomorrow, the US CPI data for April will also be released.
Currently, economists generally expect that after 3 consecutive months of higher-than-expected data, the core CPI excluding food and energy will return to a relatively moderate growth rate.
Furthermore, Bank of America strategist Michael Hartnett recently stated that interest rate cut bets have pushed investors' optimism to a two-and-a-half-year high, but if there are signs of “stagflation,” the stock market will be hit.
According to Bank of America's global poll, 82% of people expect the Federal Reserve to cut interest rates for the first time in the second half of the year. They regard “going long on the dollar” as the second “most crowded transaction” in May.