Given the stock market rally and rise in Treasury yields we have seen since the election, many economists and investors probably are not paying too much attention to economic reports that cover October and prior months. But what if one of those reports of pre-election time periods implied that the bump in inflation seen in recent months was already coming back down?
The U.S. Department of Labor has released its producer price index (PPI) for final demand, and the headline monthly reading was flat at 0.0%. Bloomberg had been calling for a gain of 0.3%, the same as the September headline PPI report.
Then there is the core reading of PPI, which excludes food and energy with the aim of smoothing out volatility. This core reading went in the red zone here in October: −0.2%. Bloomberg called for a reading of 0.2%, consistent with the September reading.
Where things get more comparable and more important is on the annualized, year-over-year numbers. Headline PPI was up 0.8% in October, versus 0.7% in September. The core PPI reading (again, without food and energy) was up 1.2%.
Then there is the newer measurement for a true core reading that excludes food, energy and trade services. This deeper core reading was −0.1% in October’s monthly reading (versus a positive 0.3% in September) and was 1.6% on the year-over-year reading (versus a positive 1.5% in September).
If you break these down in non-numeric terms, the issue is that weak food and services costs acted to offset energy gains. Wholesale food prices were −0.8% in October, confirming the food deflation that grocery store executives have been discussing. Service prices were −0.3%, while energy prices were up by 2.5%, after a gain or more than 9% in gasoline.
Again, this is an October reading. It does not include the massive post-election rally and does not even include the potential bump in more spending and higher sentiment that is being seen in more live November readings.
After five straight days of a rally, and after one-hour of trading on Wednesday, the Dow was down 59 points and the S&P 500 was down four points. The yield on the 10-year Treasury yield is 2.24%, and the yield on the 30-year was last seen at 2.94%.
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
