Current Prices

The Philly Fed prices paid index jumped in April. 59% of firms reported paying more for inputs, up from 44% in March.

The April 2018 Philadelphia Fed Manufacturing Business Outlook Survey shows continued expansion but input prices are rising far faster than prices received for manufactured goods.​

Current and FutureGeneral Activity Indexes

I have not paid much attention to the regional Fed reports because they have tracked actual manufacturing output poorly for quite some time.

However, the prices paid and prices received indexes make perfect sense in light of Trump's foolish tariffs.

Price increases for purchased inputs were reported by 59 percent of the manufacturers this month, up notably from 44 percent in March. The prices paid diffusion index increased 14 points to its highest reading since March 2011. The current prices received index, reflecting the manufacturers’ own prices, increased 9 points to a reading of 29.8, its highest reading since May 2008.

Diffusion Index Comments

Once again diffusion indexes have serious problems. They measure direction, not amplitude.

For example, if one firm reports prices paid rises 25% and another reports prices paid drops 1%, there is no net change in the index for those two firms.

We have an idea that prices are rising, but there is no indication by how much.

Beige Book

There is nothing remotely startling by this report in light of the Beige Book report yesterday.

The Beige Book is a compilation of all the Fed regional reports, including the Philly Fed.

Yesterday, I commented Fed's Beige Book Notes "Dramatic" Increases in Prices Due to Tariffs.

Bond Market Reaction

Even though the Philly Fed report should have been completely expected, bond yields jumped as if the report provided new, significant news.

Bond

The inflation scare is in full swing, but the long end of the curve is still quite contained.

I side with Lacy Hunt at Hoisington Management regarding the attractiveness of the long end of the curve.

This material is based upon information that Sitka Pacific Capital Management considers reliable and endeavors to keep current, Sitka Pacific Capital Management does not assure that this material is accurate, current or complete, and it should not be relied upon as such.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD holds above 1.0700 after US inflation data

EUR/USD holds above 1.0700 after US inflation data

EUR/USD stays in the lower half of its daily range but continues to trade above 1.0700 in the early American session on Friday. The data from the US showed that the annual Core PCE Price Index declined to 4.9% in April as expected, making it difficult for the dollar to gather strength.

EUR/USD News

GBP/USD trades above 1.2600 as dollar struggles to find demand

GBP/USD trades above 1.2600 as dollar struggles to find demand

GBP/USD clings to daily gains above 1.2600 and remains on track to end the week in positive territory. The greenback struggles to attract investors after the data from the US showed that PCE inflation softened in April. 

GBP/USD News

Gold pulls away from daily highs, holds above $1,850

Gold pulls away from daily highs, holds above $1,850

Gold has lost its traction in the second half of the day on Friday and declined toward the $1,850 area. The benchmark 10-year US Treasury bond yield staged a modest rebound on the US PCE inflation data, not allowing XAU/USD to preserve its bullish momentum.

Gold News

Terra’s LUNA 2.0 support expands with Binance and Kraken welcoming the airdrop, here’s how you need to prepare

Terra’s LUNA 2.0 support expands with Binance and Kraken welcoming the airdrop, here’s how you need to prepare

Terra’s LUNA fork proposal has passed with 65.5% votes, Revival Plan 2 in action without algorithmic stablecoin UST. LUNA price could wipe out losses incurred by holders in the colossal crash of LUNC and UST. 

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Majors

Cryptocurrencies

Signatures