Highlights
After a most unpleasant US consumer price index report on Wednesday, the focus on Thursday shifts to the US producer price index update due at 8:30 am ET. CPI came in up 0.5 percent on the month and up 3.0 percent on the year for January, well above expectations. That added to worries that inflation is headed back up. The question for Thursday is whether PPI-FD will add to the level of concern. The Econoday consensus for PPI-FD looks for monthly increases of 0.3 percent for total and PPI-FD ex-food and energy. By coincidence, that was the same expectation for CPI.
On Wednesday, Fed Chair Jerome Powell conceded that the CPI reading topped almost every forecast but said he would not get excited about any single report. The problem is the Fed has seen a succession of reports suggesting the disinflation process has stalled. Powell said the CPI reading tends to confirm his view that while there has been progress on inflation, there is still work to be done, and policy needs to remain restrictive, i.e., where it is. Markets now are pricing in only one 25 basis point rate cut this year, by year end.
Back on CPI: Another Fed official, Chicago Fed President Austan Goolsbee, on Wednesday called attention to the January effect. He recalled an outsized rise in inflation occurred last January, which receded later, and implied the same might happen this year. Separately, Powell noted that PPI is a good leading indicator for the Fed's preferred inflation measure, the personal consumption expenditures price index, which suggests he will watch PPI-FD closely.
On Wednesday, Fed Chair Jerome Powell conceded that the CPI reading topped almost every forecast but said he would not get excited about any single report. The problem is the Fed has seen a succession of reports suggesting the disinflation process has stalled. Powell said the CPI reading tends to confirm his view that while there has been progress on inflation, there is still work to be done, and policy needs to remain restrictive, i.e., where it is. Markets now are pricing in only one 25 basis point rate cut this year, by year end.
Back on CPI: Another Fed official, Chicago Fed President Austan Goolsbee, on Wednesday called attention to the January effect. He recalled an outsized rise in inflation occurred last January, which receded later, and implied the same might happen this year. Separately, Powell noted that PPI is a good leading indicator for the Fed's preferred inflation measure, the personal consumption expenditures price index, which suggests he will watch PPI-FD closely.
Definition
Market Focus details key factors in the coming day that will impact the economic outlook and the financial markets. These include central bank events, economic indicators, policymaker speeches as well as expected political and corporate developments.
Description
Keeping up-to-date with event schedules and the economic calendar is key to understanding the global financial system. Econoday's Market Focus allows investors and policymakers to carefully track what will be making news and moving the financial markets in the coming day.
