{"id":191954,"date":"2023-06-14T10:45:00","date_gmt":"2023-06-14T14:45:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=191954"},"modified":"2023-06-14T10:37:40","modified_gmt":"2023-06-14T14:37:40","slug":"deflation-pushes-producer-prices-to-28-month-lows-ahead-of-feds-interest-rate-decision","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/deflation-pushes-producer-prices-to-28-month-lows-ahead-of-feds-interest-rate-decision\/","title":{"rendered":"Deflation Pushes Producer Prices To 28-Month Lows Ahead Of Fed&#8217;s Interest Rate Decision"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\" id=\"h-zinger-key-points\">ZINGER KEY POINTS<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>PPI inflation plummeted 0.3% monthly and fell from 2.3% to 1.1% annually in May, the lowest since December 2020.<\/li>\n\n\n\n<li>Most of the May decline is attributable to the index for final demand energy, which dropped 6.8%.<\/li>\n<\/ul>\n\n\n\n<p>U.S. producers now face the reality of deflation, as the Producer Price Index (PPI) for final demand slumped 0.3% month-on-month in May, down from the previous 0.2% monthly increase and below the expected 0.1% fall, the U.S. Bureau of&nbsp;<a href=\"https:\/\/www.benzinga.com\/economics\/macro-economic-events\/23\/06\/32842587\/5-commodity-etfs-to-watch-when-ppi-inflation-data-drops-wednesday\" target=\"_blank\" rel=\"noreferrer noopener\">Labor Statistics reported Wednesday.<\/a><\/p>\n\n\n\n<p>The PPI print follows the May&nbsp;<a href=\"https:\/\/www.benzinga.com\/etfs\/broad-u-s-equity-etfs\/23\/06\/32833950\/surprise-dip-in-may-inflation-raises-hopes-for-pause-in-fed-rate-hikes\" target=\"_blank\" rel=\"noreferrer noopener\">consumer price index (CPI)<\/a>&nbsp;reading, which came in lower than expected, supporting market belief that the Fed is nearing the end of its interest rate hike cycle.<\/p>\n\n\n\n<p>The market focus is now on the upcoming interest rate decision by the Federal Reserve, scheduled for 2 p.m. ET Wednesday, followed by the press conference with Chair&nbsp;<strong>Jerome Powell&nbsp;<\/strong>at 2:30 p.m. Investors are almost fully anticipating a pause in the Fed\u2019s hike cycle, but their attention will be on whether this is regarded as a permanent halt&nbsp;or simply a skip.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Producer Inflation Drops In April: 5&nbsp;Things You Need To Know&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Headline PPI inflation fell 0.3% from a month ago. In annual terms, producer prices came in 1.1% higher from a year ago, falling short of the expected 1.5%. This marks the lowest producer inflation rate since December 2020.&nbsp;<\/li>\n\n\n\n<li>Core PPI inflation, which excludes&nbsp;foods and energy, ticked 0.2% higher on the month, in line with both the reading in April and expectations.&nbsp;In annual terms, the core PPI was 2.8% higher, slightly lower than the expected 2.9% and down from 3.2% in April.<\/li>\n\n\n\n<li>Most of the May decline is attributable to the index for final demand energy, which dropped 6.8%.<\/li>\n\n\n\n<li>Transportation and warehousing fell 1.4% on the month, marking the fifth straight negative monthly reading, certifying a&nbsp;<a href=\"https:\/\/www.benzinga.com\/opinion\/23\/06\/32680761\/freight-recession-5-us-stocks-to-watch-as-transportation-costs-plummet-to-pre-covid-levels\" target=\"_blank\" rel=\"noreferrer noopener\">freight recession.<\/a><\/li>\n\n\n\n<li>Sixty percent of the May decline in the PPI for final demand goods can be attributed to a 13.8% drop in gasoline prices.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Market Reactions<\/h2>\n\n\n\n<p>Treasury yields moved lower,&nbsp;with the 10-year yield down by 2 basis points to 3.8% and the two-year yield down 4&nbsp;basis points to 4.63%.<\/p>\n\n\n\n<p>The dollar, as closely tracked by the&nbsp;Invesco DB USD Index Bullish Fund ETF,&nbsp;extended losses for the session, falling 0.3% on the day.<\/p>\n\n\n\n<p>Futures contracts on the&nbsp;<strong>S&amp;P 500 index<\/strong>, which is tracked by the&nbsp;SPDR S&amp;P 500 ETF Trust&nbsp;<a href=\"https:\/\/www.benzinga.com\/quote\/spy\" target=\"_blank\" rel=\"noreferrer noopener\"><\/a>were mostly flat ahead of&nbsp;the opening bell on Wall Street.&nbsp;<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally Posted June 14, 2023 &#8211; <a href=\"https:\/\/www.benzinga.com\/economics\/macro-economic-events\/23\/06\/32853932\/deflation-pushes-producer-prices-to-28-month-lows-ahead-of-feds-interest-rate-dec\">Deflation Pushes Producer Prices To 28-Month Lows Ahead Of Fed&#8217;s Interest Rate Decision<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>PPI inflation plummeted 0.3% monthly and fell from 2.3% to 1.1% annually in May, the lowest since December 2020.<\/p>\n","protected":false},"author":1128,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18,6,8,9,26,3],"tags":[6341,77,570,610],"contributors-categories":[13584],"class_list":{"0":"post-191954","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-macro","7":"category-north-america","8":"category-region","9":"category-securities","10":"category-text-articles","11":"category-traders-insight","12":"tag-deflation","13":"tag-fed","14":"tag-inflation","15":"tag-interest-rate","16":"contributors-categories-benzinga"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.7) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Deflation Pushes Producer Prices To 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