Interest Rate Roundup

Tuesday, April 14, 2009

Producer prices, retail sales tank in March

Not the brightest bunch of economic data this morning -- at least if you're looking for a "reflation" courtesy of the Federal Reserve's massive money-pumping efforts. Let's get straight to the numbers ...

* The Producer Price Index dropped 1.2% in the month of March, compared with expectations for an unchanged reading and a February rise of 0.1%. The year-over-year PPI is now running at MINUS 3.5%, much weaker than the -1.3% reading in February and below expectations for a reading of -2.2%. This is the deepest rate of PPI deflation since January 1950. Meanwhile, the "core" PPI was unchanged last month, compared with a gain of 0.2% in February and expectations for a 0.1% rise. The YOY core PPI is still higher -- up 3.8% as of March compared with a 4% gain in February.

* More importantly, retail sales tanked 1.1% in March. That compared with a gain of 0.3% in February and failed to match the 0.3% gain that was expected. If you strip out autos, you get a 0.9% decline in sales, compared with a 1% gain a month prior. And if you want to strip out both autos and gas, you get a -0.8% reading, the biggest drop since December.

Bond prices are off their intraday lows on the news, while stock futures have given up some of their pre-number gains.


  • Nice recap, PPI = ugly. What happens when prices continue their grind down but bond yields don't follow? It'll be the opposite of Greenspan's 'savings connundrum.' Yikes.

    By Anonymous Anonymous, at April 14, 2009 at 2:53 PM  

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