The Producer Price Index for December is lower than expected

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Published Date 1/12/2024

December producer prices released at 8:30 am ET, prior to the release the 10 year note yield at 4.01% +4 bps. Inflation declined from estimates, initial reaction dropped the 10 year note from 4.01% to 3.96%. PPI month/month expected +0.2% declined 0.1%, and down 0.1% from November, year/year expected +1.3% increased just 1.0%. Core PPI (ex-food and energy) month/month expected +0.2% reported 0.0%, year/year forecasts +2.0% but increased 1.8%.

Yesterday’s CPI was slightly hotter than forecasts but was ignored with outlooks for Fed rate cuts remains strong. By the end of yesterday the 10 declined 6 bps and MBS prices increased 36 bps.

JPMorgan, Bank of America Corp, Citigroup, and Wells Fargo & Co. — are all reporting results today. The kickoff to earnings season that will continue for a month with businesses rolling out Q4 results. Citi’s Jamie Dimon reminding that the continued increase in government spending “may lead inflation to be stickier and rates to be higher than markets expect.”

The US and UK struck multiple Houthi targets in Yemen retaliating against recent Red Sea attacks on commercial shipping routes. The US warning there will be more coming unless Iran-backed Houthis back off, meantime Houthis saying they will increase attacks. Crude oil in early trade increased over $3.00. Gold prices up over $21.00 at 9 am.

At 9:30 am the DJIA opened +55, NASDAQ +36, S&P +16. 10 year note at 9:30 am 3.94% -3 bps from yesterday. FNMA 6.0 30 year coupon at 9:30 am +7 bps from yesterday’s close and +37 bps from 9:30 am yesterday.

There isn’t anything left on the calendar today.

Source: TBWS

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