- The YoY rate of PPI hit 9.6% in November, a fresh record high going back to 2011.
- Risk appetite took a knock, though the US dollar was little moved in response to the data.
The headline US Producer Price Index (PPI) rose at an annual pace of 9.6% in November, according to the latest report from the US Bureau of Labor Statistics on Tuesday. That marked a new series record high (PPI was first reported back in 2011) and was above the median economist forecast for 9.2%. MoM, PPI came in at 0.8% in November, also well above expectations for a 0.5% MoM gain.
In terms of the core measures of PPI, the YoY rate rose to 7.7% in November, well above expectations for 7.2% and last month's 6.8% reading. That was driven by a 0.7% MoM pace of core price growth, which exceeded expectations for a 0.4% rise and marked an acceleration from last month's 0.4% reading.
Market Reaction
Risk appetite has taken a hit in the aftermath of the latest, concerning PPI report, which shows inflationary pressures on the supply side running significantly hotter than forecast. S&P 500 futures dropped from above 4660 to current levels under 4650 and are now down about 0.7% in pre-market trade, WTI slipped under $70.50 and hit its lowest point since December 7 in the $70.20s.
The DXY has seen a two-way reaction, despite the hawkish implications the report is likely to have on Fed policymaking decisions (it will up the pressure on them to tighten policy faster). For now, the DXY continues to trade in the low-96.00s and in the red by about 0.2% on the day.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD battles 1.0700 amid calmer risk tone, German ZEW eyed
EUR/USD is juggling in a narrow range just above the 1.0700 level in early Europe. The pair is sidelined amid a relatively calmer risk tone and a pause in the US Dollar decline. Markets digest the latest global banking sector developments ahead of Germany's ZEW survey.
GBP/USD remains pressured around 1.2250 as US Dollar recovers
GBP/USD is on a corrective move lower while testing 1.2250 in the early European morning. A broad rebound in the US Dollar is weighing on the pair, despite a better market mood. Investors stay cautious amid the global banking woes and ahead of the Fed decision.
Gold lingers below the $2,000 mark as the market awaits Fed’s policy decision
Gold price reached a fresh yearly high on Monday this week, with XAU/USD hitting the $2,000 mark for only the third time in recorded history; the last time was during the COVID era. The robust bull run began from the March low of around $1,800, and gold prices have not looked back since.
Coinbase argues core staking services are not securities in its letter to SEC
Coinbase submitted a comment letter to the US financial regulator asking for clarification on core staking services. The exchange explained that staking services fail every single prong of the Howey test, therefore, cannot be treated as securities.
FX thoughts for the week
Do central banks face a conflict between their inflation mandate and financial stability? The markets are still grappling with this question and confidence in the financial sector has not fully recovered. For now, central banks are responding with a conditional no.