Why Don't Bonds Care About The Massive Miss in PPI?
Why Don't Bonds Care About The Massive Miss in PPI?
PPI... The Producer Price Index. It sounds a lot like CPI because both are published by the Bureau of Labor Statistics and they share lots of methodology and structure. Given that CPI has been responsible for some of the biggest bond market reactions, you'd be well within your rights to expect a big sell-off after seeing something like Core PPI coming in at 0.7 vs a 0.2 forecast and 0.0 previous reading. After all, if that happened in CPI, bond yields could easily be shooting 10bps higher. But PPI is notoriously more volatile. In addition, it's most useful to the bond market due to its implications for consumer inflation. To that end, we can track the categories that flow through to PCE inflation, and those categories didn't paint nearly as inflationary a picture as the headline and core readings.
MBS down about an eighth and 10yr up 1.6bps at 4.252
MBS down 2 ticks (.06). 10yr up 1.5bps at 4.251
Bonds Little-Changed. Other Markets May Have Helped
| Time | Event | Period | Actual | Forecast | Prior |
|---|---|---|---|---|---|
| Friday, Jan 30 | |||||
| 8:30AM | Dec Core PPI y/y (%) | Dec | 3.3% | 2.9% | 3% |
| 8:30AM | Dec Core PPI m/m (%) | Dec | 0.7% | 0.2% | 0% |
| 8:30AM | Dec PPI y/y | Dec | 3% | 2.7% | 3% |
| 8:30AM | Dec PPI m/m (%) | Dec | 0.5% | 0.2% | 0.2% |
| 9:45AM | Jan Chicago PMI | Jan | 54.0 | 44 | 43.5 |
| 1:30PM | Fed Musalem Speech | ||||
| 5:00PM | Fed Bowman Speech | ||||
| Monday, Feb 02 | |||||
| 9:20AM | NY Fed Bill Purchases 4 to 12 months (%) | $6.921 billion | |||
| 9:45AM | Jan S&P Global Manuf. PMI | Jan | 51.9 | 51.8 | |
| 10:00AM | Jan ISM Manufacturing Employment | Jan | 44.9 | ||
| 10:00AM | Jan ISM Manufacturing PMI | Jan | 48.3 | 47.9 | |
| 10:00AM | Jan ISM Mfg Prices Paid | Jan | 60.5 | 58.5 | |
| 12:25PM | Fed Bostic Speech | ||||
| 2:00PM | Loan Officer Survey | ||||
