The Treasury market is rallying this morning in response to a lower than expected print in August’s PPI print, which actually contracted by 0.1% vs the 0.2% median expectation. The producer price index fell for the first time in 18 months driven largely by declining costs for machinery and equipment wholesaling. Core PPI, the measure that excludes food and energy, also saw a 0.1% contraction in August and is up 2.3% year over year; 0.4% lower than what the market was expecting. One data point doesn’t make a trend, and economists don’t expect inflation to face downward pressure going forward. PPI also is considered to be less important than CPI, which will be released tomorrow morning; and given that PCE is above the Fed’s 2% target there hasn’t been any change in the market’s expectation around a rate hike later this month.

Hafizan Hamzah
Director, Investment Management Group

09/10Consumer Credit$14.000b$16.640b$10.211b
09/11NFIB Small Business Optimism108108.8107.9
09/11JOLTS Job Openings667569396662
09/11Wholesale Inventories MoM0.70%0.60%0.70%
09/11Wholesale Trade Sales MoM0.10%0.00%-0.10%
09/12MBA Mortgage Applications-1.80%-0.10%
09/12PPI Final Demand MoM0.20%-0.10%0.00%
09/12PPI Ex Food and Energy MoM0.20%-0.10%0.10%
09/12PPI Ex Food, Energy, Trade MoM0.20%0.10%0.30%
09/12PPI Final Demand YoY3.20%2.80%3.30%
09/12PPI Ex Food and Energy YoY2.70%2.30%2.70%
09/12PPI Ex Food, Energy, Trade YoY2.90%2.80%
09/12U.S. Federal Reserve Releases Beige Book
09/13CPI MoM0.30%0.20%
09/13CPI Ex Food and Energy MoM0.20%0.20%
09/13CPI YoY2.80%2.90%
09/13CPI Ex Food and Energy YoY2.40%2.40%
09/13CPI Index NSA252.343252.006
09/13CPI Core Index SA258.414257.93
09/13Real Avg Weekly Earnings YoY0.10%
09/13Real Avg Hourly Earning YoY-0.20%
09/13Initial Jobless Claims210k203k
09/13Continuing Claims1710k1707k
09/13Bloomberg Sept. United States Economic Survey
09/13Bloomberg Consumer Comfort58
09/13Monthly Budget Statement-$185.0b-$76.9b
09/14Retail Sales Advance MoM0.40%0.50%
09/14Retail Sales Ex Auto MoM0.50%0.60%
09/14Retail Sales Ex Auto and Gas0.50%0.60%
09/14Retail Sales Control Group0.40%0.50%
09/14Import Price Index MoM-0.20%0.00%
09/14Import Price Index ex Petroleum MoM-0.20%-0.10%
09/14Import Price Index YoY4.10%4.80%
09/14Export Price Index MoM0.00%-0.50%
09/14Export Price Index YoY4.30%
09/14Industrial Production MoM0.30%0.10%
09/14Capacity Utilization78.20%78.10%
09/14Manufacturing (SIC) Production0.30%0.30%
09/14Business Inventories0.60%0.10%
09/14U. of Mich. Sentiment96.696.2
09/14U. of Mich. Current Conditions110.3
09/14U. of Mich. Expectations87.1
09/14U. of Mich. 1 Yr Inflation3.00%
09/14U. of Mich. 5-10 Yr Inflation2.60%