After a softer than expected CPI yesterday sparked an all out buying panic in stocks and bonds (before Powell pissed in the punchbowl), this morning's PPI is expected to be 'mixed' with a smaller MoM rise but higher YoY rise (beyond the 12 month highs reached in the prior month).

The headline producer price index unexpectedly tumbled 0.2% MoM in May (+0.1% MoM exp) from a +0.5% MoM rise in April - that's the biggest MoM decline since Oct 2023. This left the YoY change in the headline index down from a revised 2.3% in April to +2.2% (well below the +2.5% YoY expected)...

Source: Bloomberg

That is still the highest YoY since April 2023.

Core PPI was unchanged MoM in May (cooler than the +0.3% MoM exp). On a YoY basis, Core PPI dropped from +2.5%

Source: Bloomberg

The decline in the headline index was driven by a plunge in energy and a small deflation MoM in Services...

Source: Bloomberg

Of course, we've seen these MoM declines in PPI before... and they have always been driven by energy costs. So once again we only have to follow that!

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