Deflationary Signposts Manifest In Hard & Soft Data

QUICK QUILL — Will bond yields break down to the next resistance level? The data will test this in weeks to come.

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  1. As the Fed continues to stress the need to tackle inflation, the PPI headline cooled to a six-month low in May; PPI gauges for Airfares, Physician Care, Hospital Outpatient Care, and Portfolio Management, all of which feed into core PCE, have all slowed sharply in 2024
  2. PPI for Employment Services fell -1.3% YoY in May, a record low in data back to the late-90s; notably, the index peaked at 7.2% YoY in March 2022, the same month that Fed tightening began, a clear sign that higher rates have helped to curb wage pressures
  3. Dealer Sentiment as tracked by Cox Automotive has remained stagnant at 46 since Q4 2023, flagging revenue concerns from franchised dealers; with Light Vehicle Days’ Supply continuing to build, incentives should continue to put downward pressure on auto pricing

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