Producer Prices Signal Deflation Risk

Producer prices and final demand was down by 0.2% in May, while Bloomberg and Dow Jones were both predicting a gain of 0.1%. Even if you back out the volatile food and energy, the PPI and final demand reading was still a drop at -0.1%. Bloomberg was calling for a gain of 0.1%.

We also have to keep in mind that the PPI for final demand rose by 0.6% in April, preceded by a 0.5% gain the month before.

Equity futures are lower by 2.25 on the S&P 500 and lower by about 23 points on the DJIA. That being said, stocks have still been struggling for direction after an Iraq civil war risk sell-off rattled markets this week.

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