Cary Leahey
Cary Leahey
consumer goods passed though wage
Even though the PPI has accelerated, it hasn't passed over to consumer goods prices, and it hasn't passed through into wage gains,
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The increase in orders is particularly welcome. The bond market may like the fact that the prices paid component dropped 11 points, reversing most of the big gain in November. Analysts are banking on strength in manufacturing next year to offset some of the expected weakness in housing related consumer demand.
confidence consumer expectation figuring gas gasoline higher homes hurt levels market natural prices report spending
The market will look at the (consumer confidence) report with the expectation that confidence will still wobble with sky-high levels of gasoline prices and higher natural gas prices for heating homes in the winter, figuring that consumer spending will be hurt down the road.
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These are the kinds of things that raise eyebrows at the Fed. The implication that this January report has for wage inflation is bothersome to the market and the Fed.
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You got a favorable surprise on the CPI. We had the first decline in the core rate in 21 years, ... It just reminds the Fed, which said last week that the risks of inflation and deflation were almost equally balanced, that you still have some very residual deflation risk. And it ... supports the notion that the Fed might not have to raise interest rates at all next year.
bond clearly highs market paid points prices
On the prices paid index, you're down 50 points from the highs in October, which the bond market clearly likes.
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The PPI number had some pipeline pressure underneath the surface, but the market liked the fact that the core rate was up only 0.1 percent,
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Yet another survey of the economy is suggesting sustainable strength. Rates backed up a little because of this report, but you're treading water a bit because of payrolls data lurking on Friday.
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The bond market took this report as a sign that core inflation may be bottoming and the Fed may still be in the tightening business later this year.
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The bond market doesn't really care about the payrolls data now because you're even getting the crazy question asked about whether the Fed can ease.
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It's an impressive number. It just gives you more confidence that you'll get 4.0 percent plus (increases) in the fourth quarter and you'll hang in there through the first.
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It's certainly an impressive number, it's the lowest since early 2001.
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We're not talking about large sums of money. It is ironically only worth a couple of dollars to the Social Security check of the average American. They may be able to knock back a cold beer in a cheap bar.
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This is one of the days when nobody is really going to care because the employment report was definitely weak.