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Unexpected explosion in US PPI prices
Click to enlarge image U.S. Producer Wholesale Price PPI Index [속보] US PPI inflation unexpectedly explodes… New York Stock Exchange Bitcoin “CPI Trump Inflation Fear”
Fed FOMC re-adjusts interest rate cuts… Headline PPI price year-on-year = 1.8% year-on-month = 0% Core PPI price year-on-year = 3.2% year-on-month = 0.1%
While the US CPI consumer price is higher than expected, shaking the New York stock market and Bitcoin, this time the US PPI, or producer price index, which foreshadows future price trends, was released. The CPI consumer price index and the producer wholesale price index PPI are It is used as an important indicator by the Federal Reserve FOMC when deciding on monetary policy, such as interest rate cuts, and serves as a barometer for future interest rate cuts, freezes, and interest rate increases. The PPI producer price index is created by measuring the price changes of all products formed in bulk transactions between companies. The PPI price index, along with the CPI price index and the PCE price index based on personal consumption expenditures, is the most important economic indicator that the Federal Reserve FOMC refers to when deciding monetary policies such as freezing interest rates, lowering interest rates, or raising interest rates. PPI can be viewed as a leading indicator of the CPI price index. Considering that the prices of raw materials that producers purchase as raw materials for product production are put on the market for sale after a certain period of time, the current PPI price index can be viewed as a leading indicator of the CPI price index.
According to the New York Stock Exchange on the 14th, the United States announced the producer wholesale price index PPI following the CPI consumer price index. The PPI in October rose 0.2% compared to the previous month, expanding the increase compared to last September (0%). . If the price index such as CPI is high, the Federal Reserve FOMC’s interest rate cut may be delayed that much. Conversely, if PPI is higher than expected, an interest rate increase may be necessary. This is why Bitcoin, etc. on the New York Stock Exchange react sensitively to CPI, PPI, and PCE prices. The dollar exchange rate, government bond interest rate, international oil price, Bitcoin, Ethereum, and virtual cryptocurrencies such as Ripple are also struggling with the CPI, PPI, and PCE price indices.
The U.S. Department of Labor previously announced that the Producer Price Index (PPI) for September rose 0.2% compared to the previous month. Compared to the same period last year, PPI prices rose 1.8%. Core PPI rose 0.1% from the previous month and 3.2% from the previous year. PPI prices in September were actually higher than in August. It’s higher than the New York stock market’s expectations. As the pace of slowdown in inflation is minimal, it appears that it will be difficult for the Federal Reserve FOMC to implement a big cut interest rate cut for the time being.
The PPI price index is an index of the prices of goods and services supplied by producers to the market. It is calculated by measuring the price change of goods and services sold by the manufacturer. The producer price index is as important as the consumer price index because it acts as a leading indicator that influences the consumer price index with a lag of about a month.
The U.S. consumer price index (CPI) last month rose 2.6% compared to the previous year. The Ministry of Labor’s Statistics Bureau announced that last month’s CPI rose 2.6% compared to the previous year, and rose 0.2 percentage points (p) compared to the previous month. This is a slight increase from 2.4% in the previous month. The ‘core’ CPI, which excludes highly volatile food and energy prices, rose 0.3% from the previous month and 3.3% from the previous year. Both figures were 0.1%p higher than predicted.
Last October, Japan’s producer prices rose at a rate that exceeded market expectations. The Bank of Japan announced that the producer price index (PPI) in October rose 3.4% compared to the same month last year. This figure exceeds the market expectation of 3.0% and the previous 2.8% rise. The PPI increase rate, which was 3% in July, seemed to slow down to 2.6% in August, but then expanded again to 2.8% in September and 3.4% in October. PPI rose 0.2% compared to the previous month. Although the U.S. consumer price growth rate stopped slowing last month, the forecast that the U.S. Federal Reserve will lower interest rates by 0.25 percentage points next month has increased. The two-year U.S. Treasury bond interest rate, which is sensitive to monetary policy, fell 10 basis points to 4.24% at one point, reflecting an interest rate cut next month. According to CME FedWatch, the probability that the Federal Reserve will lower interest rates by 0.25 percentage points next month is reflected at 82.8%. It was up about 24% points from the previous day.
“The core CPI numbers put the Fed on track to cut interest rates next month,” said Lindsay Rosner, head of fixed-income investments at Goldman Sachs. “The CPI index has lowered concerns that the rate cut could be slowed immediately.” There are concerns that President-elect Donald Trump’s tariffs, tax cuts, and strict immigration policies will reignite inflation and slow down the Federal Reserve’s interest rate cuts. After the CPI announcement, several public remarks were made by Federal Reserve Board members. Minneapolis Federal Reserve Bank President Kashkari said in an interview with Bloomberg TV, “Right now, inflation is heading in the right direction,” adding, “I have confidence, but we have to wait.” St. Louis Fed President Alberto Musalem noted that recent interest rate cuts have eased policy constraints but “haven’t eliminated them completely.” Kansas City Federal Reserve President Jeffrey Schmid said that the Fed’s interest rate cuts so far were an acknowledgment of growing confidence that inflation is lowering, but did not comment on how much additional interest rates would be appropriate in the future.
The three major stock indices of the New York Stock Exchange, which closed on the morning of the 14th Korean time, went from flat to mixed. Although the U.S. Consumer Price Index (CPI) in October met expectations, investor sentiment was not enthusiastic amid concerns that the Federal Reserve’s path to interest rate cuts under Trump was uncertain and the perception of short-term overheating. On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed trading at 43,958.19, up 47.21 points (0.11%) from the previous day. The Standard & Poor’s (S&P) 500 index closed at 5,985.38, up 1.39 points (0.02%) from the previous day, and the Nasdaq Composite Index closed at 19,230.73, down 50.67 points (0.26%) from the previous day.
With former President Donald Trump winning the U.S. presidential election, Trump trading is exploding on the New York stock market. The New York stock market, Nasdaq Dow, as well as Bitcoin, Tesla, dollar exchange rate, and government bond interest rates are fluctuating. . The price of Bitcoin, known as Trump’s beneficiary asset, continues to break through the ceiling. The price of Bitcoin, the leader in virtual currency, also hit a new all-time high. As former President Trump showed friendly actions toward virtual currency, such as announcing that he would make the United States the virtual currency capital during this presidential election, Bitcoin was considered a ‘Trump beneficiary asset’ in name and reality. come. The value of the dollar, which is considered another beneficiary asset, is also strong. According to Bloomberg News, the dollar index, which shows the value of the dollar against six major currencies, including the euro and yen, also reached its highest.
Daeho Kim, Director of Global Economic Research Institute [email protected]
