PPI Comes Blazing Hot Rising Most Since 2011; Yields Spike

The week's first inflation report, the June PPI - ahead of tomorrow's even more anticipated CPI - has come in and it has come in hot and well ahead of expectations on both a monthly and annual basis:  headline PPI rose 0.3%, above the 0.2% expected, if modestly below last month's 0.5% surge, while on an annual basis, PPI increased a whopping 3.4%, well above the 3.1% consensus and May print, and highest level since Nov 2011. Energy goods and Trade services rose most MoM, but Food prices dropped 1.1% MoM.

 

Core PPI, ex food and energy, rose 0.3% on the month (exp. 0.2%) and 2.8% Y/Y, a big jump from May's 2.4%, and also well ahead of expectations of 2.6%.

According to the report, more than 40% of the increase in the index was due to higher retail margins for fuel. The gain also reflected a 1.3%MoM jump in truck transportation of freight, the largest in data back to July 2009.

Another key factor in the June increase in prices for final demand goods was the index for motor vehicles, which moved up 0.4 percent. In contrast, the cost of goods rose 0.1 percent in June from a month earlier, reflecting cooling energy prices, after a 1 percent May surge.

Some more details:

  • Final demand services: Prices for final demand services moved up 0.4 percent in June, the largest advance since a 0.5-percent rise in January. In June, half of the broad-based increase in the index for final demand services can be traced to margins for final demand trade services, which climbed 0.7 percent. Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services rose 0.3 percent and 0.5 percent, respectively.
  • Product detail: Over 40 percent of the advance in the index for final demand services is attributable to a 21.8-percent jump in the index for fuels and lubricants retailing. The indexes for hospital outpatient care; health, beauty, and optical goods retailing; truck transportation of freight; automobiles and automobile parts retailing; and food retailing also moved higher. Conversely, prices for apparel, footwear, and accessories retailing declined 2.9 percent. The indexes for inpatient care and airline passenger services also decreased. (See table 4.)
  • Final demand goods: Prices for final demand goods edged up 0.1 percent in June following a 1.0-percent rise in May. Leading the June increase, the index for final demand goods less foods and energy advanced 0.3 percent. Prices for final demand energy climbed 0.8 percent. In contrast, the index for final demand foods fell 1.1 percent.
  • Product detail: A major factor in the June increase in prices for final demand goods was the index for motor vehicles, which moved up 0.4 percent. Prices for diesel fuel, electric power, industrial chemicals, and fresh fruits and melons also advanced. Conversely, prices for fresh and dry vegetables dropped 13.8 percent. The indexes for corn, pharmaceutical preparations, and residential natural gas also moved lower.

Certainly another high inflation print that The Fed will have trouble ignoring if it wants to tilt to a dovish hike.

The bond market has certainly noticed, and the PPI report promptly sent 10Y yields to session highs.

Comments

1033eruth LawsofPhysics Wed, 07/11/2018 - 09:15 Permalink

LawsofPhysics said, "Sorry, but this is NOT the 70s', not by a long shot!!!!!  This will be a global currency collapse."
 

Are you using "global currency collapse" as a substitute for "lots of inflation"?

There can not be "global currency collapse" when it is a coordinated effort to devalue among all of the central banks.  There is plenty of inflation though.  

When a countries currency devalues at a MUCH faster rate than others, THEN you get a currency collapse like in Venezuela.  Or it can devalue because of a lack of confidence like in Argentina or Turkey.  But once again, if a country has a central bank then it can counter "collapse" by printing and postpone it with a long term spiraling inflation cycle.  See Japan as an excellent example.  If they didn't have a central bank, they would have been tits up by now.  

 

In reply to by LawsofPhysics

LawsofPhysics 1033eruth Wed, 07/11/2018 - 09:27 Permalink

"There can not be "global currency collapse" when it is a coordinated effort to devalue among all of the central banks. " ---

 

LMFAO!!!!  Wow, hubris on display!!!!

Tell me asshat, what is the "price" of something when you don't have something I want in exchange? Guess what fucker? Us producers will simply produce for ourselves and all you pure consumers can fuck off and die. Soon enough, if you don't have something fucking real to barter with, something that has real value and required real work/real risk to produce you will be dead.

The fundamental fraud is that bankers and financiers have access to all the currency they want with no real work and no real risk!!!  YES, it is now a GLOBAL coordinated effort, so of course it will be the death of ALL currencies GLOBALLY!!!!!

A perfect example of the hubris running wild. Thanks for that!

In reply to by 1033eruth

DingleBarryObummer Mittens is a god Wed, 07/11/2018 - 08:55 Permalink

Civil War I tells yas!!!

the right sat around and let Obama redistribute their wealth for 8 years and now I'm supposed to believe they are going to do something about it?

Regardless, if it does happen, the (((cabal))) will fund/instigate both sides because it's a twofer: they get to lend more money at abusively high interest, and cull the herd.  A win win for them.  Same as it ever was. 

Goyims and schw@rtzes killing each other is profitable business for them.

 

In reply to by Mittens is a god

LawsofPhysics Wed, 07/11/2018 - 08:51 Permalink

"once unemployment drops below 6.5% we will normalize interest rates" - Ben Bernanke

"debt does not matter" - Ben Bernanke

Certainly Ben would not lie to congress, but if he did then he needs to be executed publicly.

Raise those rates motherfucker!  I triple dog dare you!

LOLOLOL!

hotrod Wed, 07/11/2018 - 08:57 Permalink

Wow with all this debasement of money seems like I should be getting a decent interest rate for the risk.

 

The Best Money Market Account Rates in May 2018

InstitutionAPYMinimum Balance Amount

CIT Bank1.75%$100

UFB Direct1.60%$5,000

Capital One1.60%$10,000

 

AWESOME RECOVERY

lizzoilz Wed, 07/11/2018 - 09:03 Permalink

Don't care what shepwave says the markets will crash

 

Here is the blog from shepwave

 

ShepWave Pre-Market / Intra Day Update for Wednesday. FUTURES--SHOWING VOLATILITY!?
by ShepWave.com
Posted: 7/10/2018 23:53 EST

 

Read through the intra day notes and analysis from Tuesday's Intra Day Update.

Then notice the futures are down as of 11:30 PM ET USA Tuesday evening. The Dow Industrials futures are about 146 points below fair value.

Again--YOU JUST CAN'T MAKE THIS STUFF UP!

Volatility?!  You bet!

Don't be faked out. Will a sizable gap down open on Wednesday morning (say a gap down open of .5% or greater in the SPX) have an effect on the short--to--mid term trend for the major U.S. equity indexes?

Well, read the update!

 

SybilDefense Wed, 07/11/2018 - 09:08 Permalink

Instead of the faux feel good increase in wages some of the people get, why not strive for a - inflation rate, where every consumer gets more.

I'd rather have the value of my dollars increase than getting more paper that is worth %2 less annually.  Is organic fiscal growth impossible without inflating the prices of goods and services.

TheTruthisSomewhere Wed, 07/11/2018 - 09:10 Permalink

When the people who control the money supply they can make up numbers to suit their needs.  Where did food actually go down from last year?  

Shadow statistics shows an average inflation of 8% since 2000 which is more realistic than the 1 to 2% the government has shown over the same time.

khakuda Wed, 07/11/2018 - 09:59 Permalink

No inflation here.

$25,000 monthly long term care cost for mother in laws assisted care facility in Georgia - $300,000

2 college tuitions @ $80,000 per year - $160,000

Stocks and bonds inflated to record valuations meaning each dollar buys less retirement income/value

 

But since the BLS and Fed tells me their statistics say there is no inflation, they must be telling the truth.