Live Markets: PPI, jobless claims: Rate cut this year? Yeah, right

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13/02/2025 16:33

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    PPI, JOBLESS CLAIMS: RATE CUT THIS YEAR? YEAH, RIGHT
Any market participants still clinging to the fading hope that
the Fed will cut interest rates this year found little in
Thursday's data to justify those white knuckles.       
    The prices U.S. companies get for their goods and services
at the figurative factory door grew by more than expected in
January.  
    The Labor Department's final demand producer prices index
(PPI)  USPPFD=ECI  rose by 0.4%, a warmer reading than the 0.3%
consensus, but a slight cool-down from December's upwardly
revised 0.5%.
    Year-on-year, PPI held repeated the prior month's restated
3.5% growth, landing well to the north of the 3.2% analysts
expected.
    Core PPI, which leaves out volatile food, energy and trade
services, rose by 0.3% and 3.4% on monthly and annual bases,
respectively. 
    Diving into the data, intermediate demand - which tracks
business-to-business prices - showed a fairly stark 5.5% monthly
jump in unprocessed goods. That suggests surging input costs,
which are likely to be passed along, at least in part, to the
consumer. 
    "Prices for inputs in early-stage intermediate demand grew
at the fastest pace since 2023, meaning companies are seeing raw
inputs rise across goods and services," writes Scott Helfstein,
head of investment strategy at Global X. "The Fed is likely
going to pay attention and be cautious to see how that passes
through to consumer expectations."
    It's the third hotter-than-expected January inflation marker
released in just the last week, and would appear to justify
Powell & Co's indefinite rate cut pause.
    "Thursday's stronger-than-expected PPI helps to confirm,
especially after Wednesday's hot CPI, that inflation did indeed
come roaring back in January," says Paul Stanley, chief
investment officer at Granite Bay Wealth Management. 
    "(It) makes the Federal Reserve's path much clearer, since
there is arguably zero reason to cut interest rates right now."
    Still, the glass-half-full crowd would point out that due to
upward revisions to December data, it's the first sign that
price growth slowed down last month.      
    Changing gears, a separate report from the Labor Department
showed 213,000 U.S. workers joined the line outside the
unemployment office last week  USJOB=ECI , 3.2% fewer than the
previous week and slightly below the 215,000 analyst estimate.
    The underlying trend, as expressed by the four-week moving
average of initial claims, is essentially sideways with a slight
downward bias.
    Recent layoff announcements, from JPMorgan, Chevron, Boeing
and others, suggests that initial claims are set to start
climbing. But for now, the labor market looks healthy.
    "Fed policy is aimed at supporting the economy and the job
market before a recession shapes up," says Carl Weinberg, chief
economist at High Frequency Economics. "Fed Chair Powell says
that the U.S. economy is in 'great shape' and is the envy of
advanced economies around the world."
    "These low claims figures support that assessment." 
    Ongoing claims  USJOBN=ECI , reported on a one-week delay,
decreased by 1.9% to 1.85 million, also slightly south of
consensus.
    (Stephen Culp)
    *****

    
    
    FOR THURSDAY'S EARLIER LIVE MARKETS' POSTS:
    
    WALL STREET RISES WITH EARNINGS HELP EVEN AS INFLATION
STICKS - CLICK HERE
    
    U.S. STOCK FUTURES HIGHER, YIELDS LOWER, DESPITE HOT PPI -
CLICK HERE
    
    EUROPEAN DEFENCE: "THIS IS JUST THE START OF A SUPER-CYCLE"
- CLICK HERE
    
    THREE REASONS WHY EUROPEAN NATURAL GAS PRICES CAN FALL -
CLICK HERE
    
    HERE'S WHY THE ECB SHOULDN’T FOLLOW A HAWKISH FED - CLICK
HERE
    
    ANOTHER DAY, ANOTHER STOXX RECORD - CLICK HERE
    
    EUROPE BEFORE THE BELL - UKRAINE PEACE TALKS TOP OF MIND -
CLICK HERE
    
    MORNING BID UKRAINE TALKS ABSORB US INFLATION SHOCK - CLICK
HERE
      

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
PPI intermediate demand raw materials and ISM prices paid    https://reut.rs/41f7hSo
Inflation gauges    https://reut.rs/40YKxof
Jobless claims    https://reut.rs/3WXAFKg
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