US PPI data later today to set the tone ahead of North American trading
Yesterday, we got one of the hottest CPI reports in years and the inflation debate will continue on today with the release of US PPI data for April.
Supply constraints across the globe has seen input cost inflation rise at an unprecedented pace in the past few months and that will translate into the numbers here today.
Adding to that of course is the base effect adjustments from the crash in price pressure in March to April last year amid the pandemic hit at the time.
Base effects or not, another hot print here will just continue to stoke the inflation fire more so than the CPI report yesterday already did.
Treasury yields may be looking calm now but the market may yet be gearing for a case of the déjà vu in trading today.
That said, keep an eye on the recent ceiling in 10-year yields closer to 1.75%. That may yet put a lid on top of all the latest fears surrounding inflation this week.
But when it comes to inflation, expectations may be the one that matter more. 10-year breakevens have climbed to 2.56% this week - the highest since March 2013*.
