The April producer price report contained mostly bad news, with core prices up 0.4% (consensus +0.2%), pushing their year-over-year gain to 3.0%, topping the July 2005 high of 2.8% and moving to its highest level since December 1991. At the earliest stage of production, crude materials prices increased 3.2%.
Excluding food and energy, crude materials prices increased a whopping 7.9%, a level exceeded only twice since record-keeping began in 1972 (+8.7% in May 2006 and +11.0% in July 2004).
Core intermediate prices, which reflect crude materials that have had some processing, increased an outsized 1.2%, the most since a 1.4% increase in October 2005, which was the most since January 1980. The increase in these so-called pipeline figures will continue to pressure producer prices upward in the months ahead.
The only solace in these horrendous figures is the fact that the financial markets have already largely digested the idea that producer prices are rising rapidly, a fact that can't be missed when watching commodities prices on a day-to-day basis.
Tony Crescenzi Blog Booming Bond Issuance 5/19/2008 2:45 PM EDT Isuances increase again, following a record-setting week.
Tony Crescenzi Blog Swap Spreads Are Dropping 5/19/2008 11:44 AM EDT This shows that worries about the credit crisis may be ebbing.
Tony Crescenzi Blog Biz Loans Flat 5/19/2008 10:44 AM EDT There was mostly good news in this week's data.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market,
first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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