- US April PPI +2.2% y/y vs +2.2% expected
- Powell: The labor market is about as tight as it was before the pandemic in 2019
- US credit card balances rose 13.1% year-over-year in the first quarter
- ECB's Wunsch: High rates for longer from the Fed might lead to a slower pace of cuts
- ECB's Knot: Highlights how US pandemic decisions were productivity-enhancing
- Home Depot sees softening demand for large projects
- Pres. Biden: China heavily subsidizes products that are dumped in foreign markets
- Fed's Cook doesn't comment on monetary policy
- Nasdaq closes at a new record high
Markets:
- Gold up $21 to $2357
- WTI crude oil down $0.78 to $78.34'
- US 10-year yields down 3.6 bps to 4.445%
- NZD leads, JPY lags
- S&P 500 up 0.5%
The PPI report was an interesting case as it's a secondary inflation measure but came one day ahead of CPI. Given that it's also from the BLS, it could offer hints on seasonal adjustments and the direction of the all-important inflation report.
When the headline came out +0.5% compared to +0.2% expected, the US dollar surged and the rest of the market recoiled. However the move didn't last long because the prior month was revised down to -0.1% from +0.2%, leaving the year-over-year reading in-line at 2.2%. It was a similar story in the core.
It took about 10 minutes to fully fade the moves and that just underscored the buy-the-dips mentality in the broader market. Powell furthered the move with his usual dovish rhetoric and as he called the PPI report 'mixed not hot' due to the revisions.
I would have thought we would see some late-day angst in risk trades and perhaps some USD buying ahead of the CPI report but we finished near the extremes of the day. Part of that might be the meme-mania that's gripped equities with GME and AMC back for another edition.
In terms of market moves, FX was much less volatile that other markets. Aside from the PPI volatility, it was a a day of steady USD selling aside from USD/JPY, which continued to edge higher.
What if tomorrow's CPI does the same as PPI? It's an interesting one to consider but with the commentary from Home Depot and Powell, it's compelling to believe that it's only a matter of time until inflation falls and rates get cut. More worrisome might be the euphoric mood, at least in the short term.
