Producer Prices Surge At Fastest Rate Since 2011

After yesterday's surge to 7 year highs in consumer price inflation had zero impact on bonds or stocks, a very different regime than just a few months ago, one wonders what today's producer price inflation print will do.

 

After slowing in April to +2.6% YoY, PPI surged in May by 3.1% YoY - the biggest price rise since Dec 2011...

Energy prices dominated the increase - rising 4.6% YoY.

Final demand goods details:

Half of the advance in the index for final demand goods is attributable to a 9.8-percent increase in gasoline prices. The indexes for jet fuel, fresh and dry vegetables, diesel fuel, beef and veal, and light motor trucks also moved higher. In contrast, prices for chicken eggs fell 31.2 percent. The indexes for residential natural gas and for plastic resins and materials also decreased.

Final demands Services details:

One-third of the May advance in prices for final demand services is attributable to a 1.5-percent rise in margins for machinery, equipment, parts, and supplies wholesaling. The indexes for chemicals and allied products wholesaling; outpatient care (partial); apparel, footwear, and accessories retailing; food retailing; and truck transportation of freight also moved higher. Conversely, prices  for guestroom rental fell 4.4 percent. The indexes for fuels and lubricants retailing and for hospital inpatient care also moved lower.

Core PPI also rebounded from April, rising at 2.6% YoY.

And if ISM surveys are to be believed, PPI has further to rise...

Just like yesterday's CPI, bond yields are underwhelmed...

2Y Yields are up a shocking 1bps...

50bps rate-hike anyone?

*  *  *

And once again more conspiracy theories come out...

Comments

scubapro J J Pettigrew Wed, 06/13/2018 - 09:29 Permalink

exactly.    review each recession and the cure always was a cheap dollar and negative real rates.   rest of world gets more $, US borrows it back and only has to pay interest while asset prices climb.

its a fiat system and the quantity of money must always grow, if it doesnt its a recession.   eric basmajian on seeking alpha has good articles about money velocity and this too.

In reply to by J J Pettigrew

Last of the Mi… J J Pettigrew Wed, 06/13/2018 - 08:57 Permalink

Inflation is the gravy that pays for QE. They will always lie about it, obfuscate, deflect, and simply ignore the real numbers. It's the Fed's plan. The spread between the increase in wages and the inflation percent is cashola in the pockets of the bankers and globalists and they damn well know it. Usually they will throw in the "economy boosting effect" of a weaker dollar and of course the "diversity of open borders" to guarantee the spread but the fact is, it's about greed. A well managed economy doesn't need massive stealth inflation on basic goods and services to line bankers' pockets. It's one of the reasons a new Expedition is $70,000. They're lying Jim. 

In reply to by J J Pettigrew

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In reply to by ll951983

LawsofPhysics Wed, 06/13/2018 - 08:43 Permalink

The Fed has been changing the definition of "inflation" for 100+ years!!! There are now almost 8 billion people on this rock all competing for the remaining real resources that are required for a decent standard of living. In other words, there is plenty od demand for real shit...

The true costs of living are increasing at about 8% annually by my calculations...

...the "let the majority eat cake" monetary experiment continues...

small axe Wed, 06/13/2018 - 08:46 Permalink

"Surging inflation is a sign of a vibrant economy, low unemployment, solid monetary policy, and overall economic well-being for every citizen."

from Ben Bernanke's memoirs, "My Gift to You," p101

 

Albertarocks Wed, 06/13/2018 - 09:22 Permalink

I never forgot a statement I heard sometime back in the mid to late 70's from an economist who said "the Fed always hikes rates too little and too late".  Next thing I knew gold had shot from $150 to the unheard of price of $850.  An absolutely 'impossible' price at that time... unimaginable!

I never forgot those words and I'm using them to my advantage today because I'm seeing the exact same conditions that we saw in 1975 repeating all over again, only maybe as much as 10x as bad.  I hope you are too.  My best advice... buy silver.  Lots and lots of silver.

PitBullsRule Albertarocks Wed, 06/13/2018 - 10:04 Permalink

I remember filling up our "mini bike" gas tank in 1974 for about 35 cents. I had to be careful not to put too much, because I only had 35 cents, and in those days you paid after you put the gas in. It was either buy the gas, or buy a bottle of coke, in a glass bottle, and maybe a snack, with the 35 cents. Now days if you find 35 cents on the road, you might not even pick it up!

In reply to by Albertarocks

Zhaupka Wed, 06/13/2018 - 10:39 Permalink

India Producer Prices: India is the largest producer and exporter of Humans and Drugs.

India's Pharmaceutical Industry is the 4th Largest on the Planet.

India Pharmaceutical Industry manufacture exclusively for the United States and European pharmacies.

Many drugs in a local pharmacy come from Drug Companies in India.

Many brand name drugs in the United States are manufactured with base ingredients supplied by India.

If wages rise a high percentage per year in both India and China, compared to wages in the United States, both India and China wages shall continue to be 1/5 and 1/3 respectively to United States wages.

Competitive? No. The United States cannot compete.

mo mule Wed, 06/13/2018 - 10:42 Permalink

Once a couple of more volcano's go off, there's going to be a lot less people. Then no one will care about any of this. Time is short...

Lie_Detector Wed, 06/13/2018 - 13:07 Permalink

It is obvious that the people who conjure up the inflation numbers live in a different world.

They must live in a world that does not need gasoline, auto insurance, food, etc.

ALL of these are up close to 20 percent from the first of the year (AT LEAST! 20%).