Market Insights

Don’s Notebook May 9, 2018

Producer prices open three straight days of inflation data. Today’s announcement, the Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of indexes that measures the average change over time in the prices received by domestic producers of goods and services.

• Prices are up for steel and aluminum but overall wholesale prices proved subdued in April.
  • Steel products rose a steep 3.2 percent in April vs a 1.9 percent rise in March when tariffs were first imposed, with aluminum up 1.8 percent in April after a 1.4 percent rise in March.
  • Year-on-year rates are very elevated: up 7.4 percent for steel and 11.9 percent for aluminum.
  • The headline increase of 0.1 percent was in line with analyst expectations.
• When excluding food, (where prices fell 1.1 percent), and energy, (which inched only 0.1 percent higher), producer prices did show a 0.2 percent increase.

Overnight markets were mixed:

• The MSCI Asia Pacific Index lost 0.3 percent.
• Japan’s Topix index closed 0.4 percent lower despite the yen weakening against the dollar.
• In Europe, the Stoxx 600 Index was 0.2 percent higher at 5:45 a.m. with energy-related shares by far the best performers on the back of rising crude prices.
• S&P 500 futures pointed to a gain at the open and gold slipped.

Earnings today include: Softbank Group, Marriott International, Siemens, Toyota Motor, Liberty Media, Mylan, Glaukos and Vitamin Shoppe.