The Producer Price Index rose at a pretty hefty pace in November, but the 0.5 percent advance was a sizable step down from October's 1.7 percent gain. Still, as a headline number this doesn't look like a great number. Rueter's had this to say:
Producer Price Gain Bigger Than Expected
U.S. producer prices climbed an unexpectedly steep 0.5 percent last month as energy costs mounted despite a fall in oil prices, a government report showed on Friday.
The emphasis at Bloomberg, on the other hand, was somewhat different (at least at first blush).
U.S. Treasury notes held their gains after the government's producer price index rose at a slower pace last month than in October, easing concern inflation may be accelerating.
As both articles note, the benign market reaction appears to be driven by so-called core inflation news. From Bloomberg:
Demand for Treasuries strengthened as the Labor Department said producer prices excluding food and energy rose 0.2 percent, in line with the median estimate of economists surveyed by Bloomberg News and compared with an increase of 0.3 percent in October...
``It is all thunder and no rain for the inflation threat,'' said Christopher Rupkey, senior financial economist in New York at Bank of Tokyo-Mitsubish, before the data was released.
And, as the Ruters report notes, it's still wait-and-see on the consumer price front.
Although the steep rise in energy prices has not fueled a widespread pickup in consumer prices, analysts and policymakers at the U.S. Federal Reserve are watching closely to see if producers begin to pass along their higher costs to consumers.
If you are interested in the PPI report from the horse's mouth, follow this link.