U.S. Producer Prices (price of goods as they leave their place of production) for January were higher in all categories, consistent with the direction of consumer prices (CPI) reported earlier in the week, confirming that inflation is heating up, particularly in the short-term.
PPI: M/M Final Demand +0.3% (+0.1% est.) ; M/M Core +0.5% (+0.1% est.) ; Y/Y Final Demand +0.9% (+0.6% est.) ; Y/Y Core +2.0% (+1.6% est.).
The U.S. dollar and treasury yields moved higher following the PPI data, with stubborn inflation seen keeping Fed rate cuts on hold. The dollar is higher vs. all G10 pairs, but volatility remains low with all gains sub-0.40%. Treasury yields are higher in all tenors, and the benchmark 10-year yield +0.077% at 4.309%.
U.S. Monthly Housing Starts declined 14.79% in January compared to December, the biggest 1-month drop since March 2020. Yesterday’s average 30-year mortgage rate was 7.24% and will move even higher today in lock step with surging treasury yields.
U.S. Equity indexes are pointing to a mixed open today, S&P500 -0.09% and Nasdaq +0.14%.
Next week’s economic calendar is light with the Presidents’ Day holiday on Monday. U.S. Mortgage Applications, FOMC Meeting Minutes, Existing Home Sales and Initial Jobless Claims are due out on Thursday.
