Morning Report: Inflation rises at the wholesale level

Vital Statistics:

 LastChange
S&P futures4,06910.8
Oil (WTI)64.79-1.27
10 year government bond yield 1.69%
30 year fixed rate mortgage 3.19%

Stocks are higher this morning after a two-day sell-off. Bonds and MBS are up small.

The producer price index rose 0.6% MOM and 6.2% YOY in April. Again, year-over-year comparisons are going to be distorted by the lockdowns of a year ago, so take those numbers with a grain of salt. Unlike the hot CPI reading of yesterday, the bond market took these numbers in stride.

Initial Jobless Claims fell to 473,000 last week. So despite the lousy jobs report, at least unemployment claims are going in the right direction.

Federal Reserve Vice Chairman Richard Clarida said that the jobs report and the hot CPI reading does not change the Fed’s outlook or plans for the economy. “We would not hesitate to act to bring inflation down,” if needed, Clarida said. But “this is one data point, as was the labor report … We have been saying for some time that reopening the economy would put some upward pressure on prices.” Note that Clarida characterized last Friday’s jobs report as the “biggest miss in history.”

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