Interest Rate Roundup

Tuesday, April 15, 2008

PPI: Up, up, and away ...

Those of us who actually eat food and drive know that inflation is a serious issue (except in housing, that is). The latest Producer Price Index figures just confirm it. Some details:

* The overall PPI surged 1.1% in March, almost twice the 0.6% forecast and almost four times the 0.3% increase in February. That pushes the year-over-year rate of wholesale inflation to 6.9% from 6.4% -- just shy of January's 7.4%, which was the biggest rise since 1981.

* The "core" PPI also gained 0.2%. That was in line with expectations, and it leaves the core PPI up 2.7% YOY, an increase from 2.4% in February. This is the biggest YOY increase since July 2005 (2.8%).

* Meanwhile, further up the production food chain, intermediate goods prices jumped 2.3% in March vs. 0.8% in February. Core intermediate prices were up 1.1%, vs. 0.6% a month earlier. Crude goods prices surged 8%, compared with 3.7% in February. Core crude goods were up 3.5% vs. 3.3% in February.

The good news on the economy? The Empire Manufacturing index popped up to 0.6 from -22.2 in March. That was much better than the -17 reading that was expected. The dollar is popping on this news, while long bonds are getting hit (down 20/32 at last count on the futures). Stock futures are up about 6 on the S&P.


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